When We Compare a Tariff Levied on an Import Where

question 17

Multiple Choice

When we compare a tariff levied on an import where the home firm is a monopoly with an import tariff where the home firms are competitive, we find:

• A) the exact same result-both the monopolist and the competitive firm charge the world price plus the tariff and both firms produce a quantity where MC = MR = world price plus the tariff.
• B) that the monopoly firm will be able to charge a higher price and limit its quantity.
• C) that the competitive firm will not be able to survive the impact of the tariff.
• D) the monopoly firm will pay its workers less and earn higher profits.

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Definitions:

Disinflation

A decrease in the rate of inflation, indicating a slowdown in the rate at which prices for goods and services increase over time.

Phillips Curve

An economic concept that illustrates an inverse relationship between the rate of inflation and the unemployment rate in the short run.

Disinflates

Disinflation refers to a reduction in the rate of inflation, leading to a slower increase in the price levels of goods and services.

Unemployment Rate

The percentage of the working-age population that is unemployed and in the process of looking for a job.