Suppose That the Garden Gnome Industry Was in Long-Run Equilibrium

question 33

Multiple Choice

Suppose that the garden gnome industry was in long-run equilibrium as described in Problem 1.On January 1, 1993, the cost of plaster and labor remained at $7 per gnome, gnome molds still cost $1,000, and the interest rate remained at 10%, but the government introduced a tax of $4 on every garden gnome sold.Then the equilibrium price of garden gnomes in 1993 would be

• A)$13.
• B)$4.
• C)$9.20.
• D)$11.
• E)$15.

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Definitions:

Domestic Price

The price at which goods or services are sold within a country's own market, excluding any tariffs, duties, or international shipping costs.

Free Trade

The free trade of goods and services across nations without the application of restrictions like tariffs, duties, and quotas.

Tariff Revenue

The income that a government earns from imposing tariffs, which are taxes on imports or exports.

Domestic Price

The charge for goods or services inside a nation's boundaries, differing from prices found in the global or foreign marketplace.