To Be Effective, an Import Quota Must

question 171

Multiple Choice

To be effective, an import quota must

• A)reduce the price and increase the quantity of imports
• B)set the price of the imported good higher than the domestic equilibrium price
• C)restrict imports to less than would be imported under free trade
• D)restrict imports to less than exports in trade with that particular country
• E)be directed at the product of a specific country

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Definitions:

Fixed Costs

Costs that do not vary with the level of production or sales, such as rent, salaries, and insurance premiums, remaining constant regardless of activity levels.

Break-Even Point

The juncture where the cumulative expenses equal total income, yielding neither a profit nor a loss.

Contribution Margin

The amount by which sales revenue exceeds variable costs of production, indicating how much revenue contributes towards covering fixed costs and generating profit.

Break-Even Sales

The amount of revenue from sales that equals the sum of the fixed and variable costs of production, resulting in zero net profit or loss.