Refer to the Figure Below to Answer the Following Questions

question 123

Multiple Choice

Refer to the figure below to answer the following questions.

The figure shows the market for shirts in Canada, where D is the domestic demand curve and S is the domestic supply curve. The world price is $20 per shirt. Canada imposes a tariff on imported shirts of $4 per shirt.
Figure 31.3.1
-Refer to Figure 31.3.1. The tariff ________ the domestic production of shirts in Canada by ________ per year.

• A)increases; 8 million
• B)decreases; 16 million
• C)increases; 4 million
• D)decreases; 8 million
• E)increases; 24 million

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Definitions:

Foreign Currency

Currency used in a country other than one's own, involved in international transactions or investments.

Forward Contract

An agreement to buy or sell an asset at a specified future date for a price that is agreed upon today.

Exchange Rates

The value of one currency for the purpose of conversion to another, which fluctuates based on market conditions and economic factors.

Forward Contract

A non-standardized agreement between two parties to buy or sell an asset at a specified future date for a price that is agreed upon today.