An Excise Tariff Imposed on Foreign Competitors Will

question 59

Multiple Choice

An excise tariff imposed on foreign competitors will:

• A) increase domestic firms' profits at all levels of demand.
• B) increase domestic firms' profits only when demand is high.
• C) increase domestic firms' profits only when demand is low.
• D) have no impact on domestic firms' profits when demand for domestic goods is high.

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Definitions:

Pollution Permits

Allowances issued by governments that give companies the right to emit a certain amount of pollutants, intended to reduce overall pollution by market mechanisms.

Supply

The total amount of a product or service that is available for consumers to purchase at various price levels.

Pollution Rights

Permits or allowances that grant entities the right to emit a certain amount of pollutants into the environment.

External Benefit

A positive effect experienced by a third party who did not choose to incur that benefit, often associated with public goods or services.