Restrictions on the Importation of Tomatoes Reduce the Supply Available

question 102

Multiple Choice

Restrictions on the importation of tomatoes reduce the supply available to the U.S. domestic market. Studies indicate that the demand for tomatoes is elastic. Compared to a free-trade situation, the import restrictions cause

• A)​higher tomato prices and an increase in consumer expenditures on tomatoes in the United States.
• B)​lower tomato prices and an increase in consumer expenditure on tomatoes in the United States.
• C)​lower tomato prices and a reduction in consumer expenditure on tomatoes in the United States.
• D)​higher tomato prices and a reduction in consumer expenditure on tomatoes in the United States.

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Definitions:

Devaluation

Government policy that lowers the nation’s exchange rate so that its currency is worth less than it had been relative to foreign currencies.

Currency

Coins and paper money that serve as a medium of exchange.

Exports

Goods and services produced in a nation and sold to customers in other nations.

Imports

Goods and services bought by people in one country that are produced in other countries.