A Tax on the Buyers of Sofas

question 46

Multiple Choice

A tax on the buyers of sofas

• A)increases the size of the sofa market.
• B)decreases the size of the sofa market.
• C)has no effect on the size of the sofa market.
• D)may increase,decrease,or have no effect on the size of the sofa market.

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Definitions:

Comparative Advantage

The capacity of a nation, person, business, or area to generate a product or offer a service with a smaller opportunity cost compared to its rivals.

Comparative Advantage

The ability of an individual, firm, or country to produce a good or service at a lower opportunity cost than competitors.

Alternative Goods

Products or services that can be used in place of each other, offering consumers choices based on price, preference, or availability.

Free Trade

The absence of tariffs, quotas, or other government-imposed barriers to international trade, allowing goods to flow freely between countries.