It Is Likely That a Tariff Will

question 23

Multiple Choice

It is likely that a tariff will:

• A)improve world welfare.
• B)increase the physical volume of trade flows.
• C)be the most efficient source of government revenue.
• D)improve relations with trading partners.
• E)do none of the above.

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Definitions:

Purely Competitive Firm

A business that operates in a market where there are many buyers and sellers, none of which can control market prices.

Profit Maximizing

The process by which a company determines the price and output level that returns the greatest profit.

Labor

The employment of both mental and physical human faculties in the generation of products and the delivery of services.

Capital

Financial assets or the financial value of assets, such as cash or goods, used in a company to fund its operations and facilitate its growth.