In the Absence of International Trade, Assume That the Equilibrium

question 143

True/False

In the absence of international trade, assume that the equilibrium price and quantity of motorcycles in Canada is $14,000 and 10 units respectively. Assuming that Canada is a small country that is unable to affect the world price of motorcycles, suppose its market is opened to international trade. As a result, the price of motorcycles falls to $12,000 and the total quantity demanded rises to 14 units; out of this total, 6 units are produced in Canada while 8 units are imported. Now assume that the Canadian government levies an import tariff of $1,000 on motorcycles. With the tariff, 8 units are produced in Canada and quantity demanded is 12 units.
-Refer to Exhibit 4.2.The tariff leads to an increase in Canadian consumer surplus totaling $11,000.

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Definitions:

Bankruptcy Proceedings

A legal process through which individuals or businesses unable to meet their debts can seek relief from some or all of their liabilities.

Transactions

The action of conducting business, trade, or an exchange between two or more parties.

Prejudgment

Making a decision or forming an opinion before having all the relevant facts or evidence.

Postjudgment Remedy

A legal solution available after a court has made a final decision in a case, allowing for the enforcement or modification of the judgment.