Exhibit 19-6 -If the Country in Exhibit 19-6 Is Initially Trading Without

question 3

Multiple Choice

Exhibit 19-6

-If the country in Exhibit 19-6 is initially trading without restrictions at a world price of $2.00 and an import quota of 50 units per month is enacted,

• A) imports will not change
• B) imports will increase from 25 to 50 units per month
• C) domestic production will increase from 100 to 175 units per month
• D) domestic production will increase from 100 to 125 units per month
• E) domestic production will increase from 100 to 150 units per month

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Definitions:

Marginal Cost

The price of creating an additional unit of any given product or service.

Profit-Maximizing Monopoly

A monopoly that adjusts its output level to where marginal costs equal marginal revenues to achieve the highest possible profit.

Additional Unit

In economics, refers to the next item or unit of production, used in analyzing the costs and benefits of producing one more unit of a good or service.

Average Total Cost

The total cost of production (fixed plus variable costs) divided by the total quantity produced, representing the cost per unit of output.