The Nation of Aquilonia Has Decided to End Its Policy

question 80

Multiple Choice

The nation of Aquilonia has decided to end its policy of not trading with the rest of the world.When it ends its trade restrictions,it discovers that it is importing incense,exporting steel,and neither importing nor exporting rugs.We can conclude that Aquilonia's new free-trade policy has

• A)increased consumer surplus and producer surplus in the incense market.
• B)increased consumer surplus in the steel market and left producer surplus in the rug market unchanged.
• C)decreased consumer surplus in both the steel and rug markets.
• D)decreased consumer surplus in the steel market and increased total surplus in the incense market.

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Definitions:

Perpetual Inventory System

An inventory management method that continuously tracks inventory levels and updates after every transaction.

Terms 2/10

A common payment term indicating that a buyer can take a 2% discount on the invoice amount if paid within 10 days.

Accounts Receivable

Money owed to a business by its clients or customers for goods or services delivered but not yet paid for, typically recorded on the balance sheet.

Perpetual Inventory System

An approach in inventory accounting that employs computerized point-of-sale systems and enterprise asset management software to instantaneously record the purchase or sale of inventory items.