Use the Following Scenario to Answer the Next Four Questions

question 39

Multiple Choice

Use the following scenario to answer the next four questions:
RayRay and Andrew produce baseballs and golf balls. RayRay can produce six baseballs per hour or four golf balls per hour. Andrew can produce three baseballs per hour or one golf ball per hour.
-Which of the following situations will arise in the domestic market following the imposition of an import quota?

• A) Imports decrease, domestic production increases, and prices decrease.
• B) Imports increase, domestic production increases, and prices increase.
• C) Imports decrease, domestic production increases, and prices increase.
• D) Imports increase, domestic production decreases, and prices decrease.
• E) Imports decrease, domestic production decreases, and prices increase.

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Definitions:

Price

The amount of money or consideration exchanged for the ownership or use of a good or service.

Business

An organization or enterprising entity engaged in commercial, industrial, or professional activities, often structured to produce and sell goods and services for profit.

Present Value

Present value represents the current value of a future amount of money or series of cash flows, discounted at a certain rate of return.

Discount Rate

In finance, the rate used to discount future cash flows to their present value, essentially reflecting the time value of money and risk.