Suppose the Swiss Government Subsidized Its Watch-Making Industry,enabling Swiss Producers

question 60

Multiple Choice

Suppose the Swiss government subsidized its watch-making industry,enabling Swiss producers to undersell foreign watch producers.The law of comparative advantage indicates that watch-importing nations would best take advantage of the Swiss subsidization policy by

• A)setting a tariff high enough to just offset the subsidy granted to the Swiss watch-making industry.
• B)setting a declining quota on the import of Swiss watches such that the nation's domestic watch-making industry would continue to grow at the same rate as the rest of the economy.
• C)setting a tariff such that the prices of Swiss and domestic watches to the consumer are equal.
• D)gladly accepting the subsidy of the Swiss government,making the appropriate adjustment for the resources temporarily displaced from the domestic watch-making industry.

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Definitions:

Finishing

The process of completing or refining the final details or surface treatment of a product, often to improve appearance or functionality.

Activities

Tasks, operations, or works carried out in an organization as part of its business processes.

Product Level

Pertains to costs or activities associated with a specific product rather than the business as a whole.

Activity-Based Costing

An accounting method that assigns costs to products or services based on the resources that they consume, aiming to provide more accurate costing information.