-Refer to the Diagram Above,where S and D Are the Domestic

question 12

Multiple Choice

-Refer to the diagram above,where S and D are the domestic supply and demand for a product.The world price of the product is $6.What would be the difference in the total revenue received by foreign producers after a quota of 20 units is imposed,compared with the total revenue received by foreign producers when a $4 per unit tariff is paid?

• A) There would be no difference.
• B) There would be $80 more revenue with a quota than with a tariff.
• C) There would be $200 more revenue with a quota than with a tariff.
• D) There would be $120 more revenue with a tariff than with a quota.
• E) There would be $220 more revenue with a tariff than with a quota.

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Definitions:

T-bill Rate

The yield or interest rate on Treasury bills, which are short-term debt securities issued by the U.S. government.

Futures Contract

A standardized legal agreement to buy or sell a particular commodity or financial asset at a predetermined price at a specified time in the future.

Spot Price

The present market cost at which an asset can be purchased or sold for instant delivery.

Contract Maturity

The specified date on which the contract expires and the financial transaction must be settled or completed.