The Figure Below Shows the Demand (D) and Supply (S)

question 10

Multiple Choice

The figure below shows the demand (D) and supply (S) curves of a good produced domestically in an economy as well as traded in the international market. Figure 21.1 In the figure,
P₁: Price of the good in the international market.
P₂: Price of the good in the domestic market after the imposition of tariff by the government.
P₃: No-trade price of the good in the domestic market.
-Refer to Figure 21.1.If the government imposes a tariff such that the price of the good in the domestic market is P₂ when the international price is P₁:

• A)the import of the good by the domestic country increases by Q₅ - Q₄ units.
• B)the import of the good by the domestic country declines.
• C)the quantity of the good exported by the domestic country declines.
• D)the domestic country is in equilibrium.
• E)the quantity of the good exported by the domestic country increases.

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Definitions:

Long-Run Average Cost Curve

A graphical representation showing the lowest possible cost per unit that can be achieved for any given level of production when all factors of production are variable.

Average Total Cost

The aggregate expense of manufacturing (sum of constant and variable expenses) spread over the total units produced.

Marginal Cost

The upsurge in full costs resulting from the fabrication of an additional unit of a product or service.

Marginal-Cost Curve

A graphical representation showing how the cost to produce one additional unit of a good or service changes as production volume changes.