One Reason for the Success That Firms Have in Getting

question 128

Multiple Choice

One reason for the success that firms have in getting the government to erect barriers to foreign competition is that jobs lost to foreign competition are easy to identify but jobs created by foreign trade are often hard to identify.Which of the following is a second reason?

• A)The costs that tariffs and quotas impose on consumers are large in total but relatively small per person.
• B)People who benefit from foreign trade tend not to vote in elections; people who are harmed by foreign trade are much more likely to vote.
• C)Firms that benefit from trade barriers have more money to lobby government officials to support the barriers than do firms that are harmed by trade barriers.
• D)The benefits from free trade are less than the costs.

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Definitions:

Total Surplus

The sum of consumer surplus and producer surplus in a market, representing the total net benefit to society from the production and consumption of goods.

Benevolent Social Planner

A theoretical construct representing an entity or policymaker that aims to achieve the most efficient and equitable outcomes for society as a whole, often seen in economic models.

Socially Efficient

A condition where resources are allocated in a way that maximizes the overall benefit to society, taking into account all externalities.

Marginal Revenue

The additional income obtained from selling one more unit of a good or service, critical in determining the optimal level of production for a firm.