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:

Consolidated Income Statement

A financial statement that presents the combined financial results of a parent company and its subsidiaries as one single entity.

Income Tax Expense

The amount of money a company owes in taxes based on its taxable income for a given fiscal period.

Cost Method

An accounting method used for investments, where the investment is recorded at cost and earnings from the investment are recognized only when dividends are received.

Retained Earnings

The portion of a company's profit that is held or retained and not paid out as dividends to shareholders.