In 2006, the European Union (EU) Threatened to Ban Imports

question 6

Multiple Choice

In 2006, the European Union (EU) threatened to ban imports of long-grain rice because traces of genetically modified rice were found mixed in to commercial supplies. Instead of a ban, suppose the EU placed a tariff on the import of long-grain rice. Which of the following would be an outcome of this tariff?

• A) The EU would gain tariff revenue.
• B) The social loss would decrease.
• C) European rice producers would decrease production.
• D) The price of long-grain rice in the EU would be higher with a tariff than if rice imports were completely banned.

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Definitions:

Consumer Equilibrium

A state where the allocation of resources by consumers results in the maximization of their utility, with no incentive to change their consumption pattern.

Utility

In economics, it refers to the satisfaction or benefit derived by consumers from consuming goods and services.

Income

The monetary payment received for work or through investments, including wages, salaries, or dividends.

Consumer Equilibrium

A condition where a consumer has allocated their income in a way that maximizes their utility, given their budget constraints and the prices of goods and services.