A Common Argument in Favor of Restricting International Trade in Good

question 21

Multiple Choice

A common argument in favor of restricting international trade in good x is based on the premise that

• A)international trade reduces total surplus in countries that export good x.
• B)international trade reduces total surplus in countries that import good x.
• C)international trade is desirable only when countries with different domestic supplies of natural resources play by different rules when trading with one another.
• D)trade restrictions can be useful when one country bargains with its trading partners.

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Definitions:

Selling Price

The amount of money charged for a product or service, or the sum of the cost plus profit.

Variable Costs

Expenses that change in proportion to the production output or sales amount.

Target Costing

A pricing strategy in which the selling price of a product is set first, and then the target cost is determined by subtracting a desired profit margin from the selling price.

Return on Investment

A performance measure used to evaluate the efficiency or profitability of an investment, calculated as net income divided by the cost of the investment.