If a Small Country Is Protecting Its Industry That Might

question 33

Multiple Choice

If a small country is protecting its industry that might mean that:

• A) tariffs are necessary because otherwise wages in the small country will be very low.
• B) tariffs are necessary to protect employment in the small country.
• C) workers in other countries are more productive than workers in the small country.
• D) it is too small to be able to achieve economies of scale in this industry.

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Definitions:

Marginal Revenue

The additional revenue gained from selling one more unit of a good or service.

Marginal Product

The additional output resulting from employing one more unit of a particular input, keeping other inputs constant.

Optimal Employment

The level of employment where the marginal product of labor equals the real wage rate, maximizing efficiency and productivity in the use of labor resources.

Marginal Product

The additional output resulting from using one more unit of a production input, keeping all other inputs constant.