It Is Argued That Special Interest Groups Are Likely to Take

question 51

Multiple Choice

It is argued that special interest groups are likely to take over and promote protectionist policies, which may lead to a decrease in national economic welfare. This argument leads to

• A) a presumption that in practice a free trade policy is likely to be better than alternatives.
• B) a presumption that trade policy should be shifted to Non-Governmental Organizations, so as to limit taxpayer burden.
• C) a presumption that free trade is generally a second-best policy, to be avoided if feasible alternatives are available.
• D) a presumption that free trade is the likely equilibrium solution if the government allows special interest groups to dictate its trade policy.
• E) a presumption that protectionist policies will better serve a country as a whole than free trade policies.

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Definitions:

Total Assets

The sum of all current and non-current assets owned by a company, including cash, inventory, property, and equipment.

Gross Margin Percentage

A financial metric that represents the gross margin as a percentage of total sales revenue, indicating the efficiency of a company in producing and selling goods.

Price-Earnings Ratio

A valuation metric for stocks, calculated by dividing the market price of a stock by its earnings per share, indicating the dollar amount an investor can expect to invest in a company to receive one dollar of that company’s earnings.

Common Stock

Equity ownership in a corporation, with shareholders entitled to vote on corporate matters and receive dividends when declared.