Chile Is an Importer of Computer Chips,taking the World Price

question 206

Multiple Choice

Chile is an importer of computer chips,taking the world price of $12 per chip as given.Suppose Chile imposes a $7 tariff on chips.Which of the following outcomes is possible?

• A)The price of chips in Chile increases to $19;the quantity of Chilean-produced chips decreases;and the quantity of chips imported by Chile decreases.
• B)The price of chips in Chile increases to $16;the quantity of Chilean-produced chips increases;and the quantity of chips imported by Chile decreases.
• C)The price of chips in Chile increases to $19;the quantity of Chilean-produced chips increases;and the quantity of chips imported by Chile decreases.
• D)The price of chips in Chile increases to $16;the quantity of Chilean-produced chips increases;and the quantity of chips imported by Chile does not change.

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Definitions:

Supply Curves

Visual representations indicating how the quantity supplied of a good changes in response to changes in its price, usually upward sloping.

Market Demand

The cumulative demand for a good or service from all buyers in the market, determined by their willingness and ability to purchase at various price points.

Marginal Revenue

The increased earnings obtained by selling an extra unit of a good or service.

Total Revenue

The total income generated from the sale of goods or services.