The Figure Given Below Depicts the Negatively Sloped Demand and Positively

question 11

Multiple Choice

The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country.Figure 21.2

-Suppose that the world price of kiwi fruit ($10 per box) is below the domestic price ($12 per box) . A tariff of $1 per box would:

• A)cause foreign producers to be better off, because the price they charge is now higher by $1 per box.
• B)cause domestic producers to be worse off by $5 per box.
• C)make domestic consumers worse off as they would be paying $1 more than the domestic price.
• D)make domestic consumers pay $1 more than the free trade price, but still $1 less than the domestic price.
• E)cause domestic producers to be worse off by $10 per box.

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Definitions:

Producer's Surplus

The difference between what producers are willing to accept for a good or service and what they actually receive.

Marginal Cost Curve

A graph showing the change in total production cost that comes from making or producing one additional unit.

Competitive Firm

A company operating in a market where it has little to no market power, and thus sets its prices based on the market conditions.

Variable Factors

In economics, these are inputs or resources whose quantity can be changed in the short term to adjust the level of output.