The Production Component of the Deadweight Loss in a Small

question 22

Multiple Choice

The production component of the deadweight loss in a small nation arises with a tariff because

• A)some domestic resources are transferred from the production of an import-competing commodity to the more efficient use in the production of an exportable good.
• B)some domestic resources are transferred from a more efficient use to less efficient production of an importable commodity
• C)domestic producers are unhappy with the imposition of the tariff,and therefore refuse to produce a higher level of output.
• D)domestic producers allocate fewer resources into the production of the import-competing good than they should based on their costs.

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Definitions:

Tax-Reduction

Strategies or actions taken to minimize the amount of taxes owed by an individual or corporation.

Asset Cost

The total amount invested to acquire, produce, or improve a tangible or intangible asset, utilized for accounting and tax purposes.

Lease-Purchase Analysis

A financial evaluation technique used to determine the most cost-effective option between leasing an asset and purchasing it outright.

Sale and Leaseback

A financial transaction where one sells an asset and leases it back for the long-term; thus, one continues to be able to use the asset but does not own it.