If a Nation Imports a Good That Can Be Domestically

question 77

Multiple Choice

If a nation imports a good that can be domestically produced, what happens to the quantity consumed of the good and why?

• A) The quantity consumed increases because the market price decreases.
• B) The quantity consumed decreases because the market price increases.
• C) The quantity consumed remains constant because the price is unchanged.
• D) The quantity consumed increases because the market price increases.
• E) The quantity consumed decreases because the market price decreases.

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Definitions:

Production Function

A mathematical representation of the relationship between inputs (like labor, capital) used in production and the output of goods and services that results from those inputs.

Fixed Costs

Fixed costs are expenses that do not change with the level of production or business activity.

Average-Fixed-Cost Curve

A graphical representation showing how the average fixed costs of production decrease as output increases, due to spreading fixed costs over a larger number of units.

Total-Cost Curve

A graph that shows the total cost of producing different quantities of a good or service.