A Common Argument in Favor of Restricting International Trade in Good

question 21

Multiple Choice

A common argument in favor of restricting international trade in good x is based on the premise that

• A)international trade reduces total surplus in countries that export good x.
• B)international trade reduces total surplus in countries that import good x.
• C)international trade is desirable only when countries with different domestic supplies of natural resources play by different rules when trading with one another.
• D)trade restrictions can be useful when one country bargains with its trading partners.

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Definitions:

ΔTVC/Δq

ΔTVC/Δq represents the change in Total Variable Cost (TVC) resulting from producing one additional unit of output, equivalent to Marginal Cost.

AVC

AVC, or Average Variable Cost, is the total variable costs divided by the quantity of output produced.

MC

Marginal Cost, the increase in total cost that arises from producing one additional unit of a product or service.

Total Variable Cost

Total Variable Cost is the sum of all costs that vary with the level of output produced, such as materials and labor.