Refer to the Graph Above, Where S_d and D_d Are

question 125

Multiple Choice

Refer to the graph above, where S_d and D_d are the domestic supply and demand curves for a product. The world price of the product is $6. If an import quota of 40 units were imposed on the product, then the equilibrium price would be:

• A) $6 and the quantity consumed 80 units
• B) $8 and the quantity consumed 70 units
• C) $10 and the quantity consumed 60 units
• D) $12 and the quantity consumed 50 units

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Definitions:

Entry Restrictions

Regulations or requirements that limit or control the access of new competitors into a market or industry.

Revenue Function

A mathematical relation that calculates the total revenue generated by selling goods or services, typically as a function of price or quantity.

Total Profits

The total income a business has after subtracting all costs and expenses from total revenue.

Cost Function

A cost function calculates the total expense required to achieve a specific level of production or activity.