When Import Quotas Are Imposed by a Government

question 270

Multiple Choice

When import quotas are imposed by a government

• A) the domestic producers always lower the prices of their products to ensure that their products are sold.
• B) the government is trying to discourage consumers from buying foreign-made goods.
• C) the supply of the product on the domestic market increases.
• D) the price ceiling for the product has to be lowered.

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Definitions:

CAPM

The Capital Asset Pricing Model, an investment theory that shows the relationship between the expected return of an investment and market risk.

Cost of Equity

The cost of equity represents the return a firm is expected to pay to its shareholders to compensate them for their investment risk.

DCF Model

DCF Model, or Discounted Cash Flow Model, is a valuation method used to estimate the value of an investment based on its expected future cash flows.

Risk Premium

The extra return expected by investors for taking on additional risk above the risk-free rate.