Table 7.3.1 Canada's Market for Widgets

question 46

Multiple Choice

Table 7.3.1
Canada's Market for Widgets

-Table 7.3.1 shows the Canadian supply of and demand for widgets. Widgets are available on the world market for $7. If the Canadian government imposes a tariff of $1, the domestic selling price will be ________ and quantity bought will be ________.

• A)$6; 48 million
• B)$7; 44 million
• C)$8; 16 million
• D)$8; 24 million
• E)$8; 40 million

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Definitions:

Budget Shortage

A situation where a government's expenditures exceed its revenues, leading to a deficit.

Information Asymmetry

A situation in which one party in a transaction has more or superior information compared to another, often leading to an imbalance in power or decision-making.

Money-Back Guarantee

A promise made by a seller to a buyer to refund the purchase price if the product does not meet certain specified criteria.

Signal

An action or conduct that conveys information about a person's intentions, capabilities, or qualities in situations of asymmetric information.