The Figure Below Shows the Demand (D) and Supply (S)

question 21

Multiple Choice

The figure below shows the demand (D) and supply (S) curves of a good produced domestically in an economy as well as traded in the international market.Figure 21.1
In the figure,
P₁: Price of the good in the international market.P₂: Price of the good in the domestic market after the imposition of tariff by the government.P₃: No-trade price of the good in the domestic market.
-Refer to Figure 21.1. If the government imposes a tariff such that the price of the good in the domestic market is P₂ when the international price is P₁:

• A)the government revenue will equal the area represented by the triangle HFG.
• B)the quantity of the good imported by the domestic country declines.
• C)the quantity of the good exported by the domestic country declines.
• D)the domestic market achieves equilibrium.
• E)the government revenue will equal the area represented by the triangle ABH.

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Definitions:

Arbitration Clause

A provision in a contract that requires the parties to resolve disputes through arbitration rather than through litigation in court.

Preexisting Duty

An obligation that a party is already legally bound to, which cannot serve as consideration for a new contract.

Forbearance to Sue

An agreement or arrangement where a party chooses not to pursue legal action in exchange for some form of compensation or under specific conditions.

Legal Claim

A formal assertion by a party seeking judicial relief due to another party's action or failure to act in accordance with the law.