Suppose That the Equations S = 2P and D =

question 161

Multiple Choice

Suppose that the equations S = 2P and D = 6 - P represent a small country's home supply and home demand curves, and the free-trade world price is $1. If the government imposed a 50% tariff on imports, how much revenue would it collect as a result of the tariff? (Note: It is possible to consume partial units of this product, such as 2.5 units.)

• A) $1.50
• B) $2.75
• C) $0.50
• D) $0.75

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Definitions:

Inflation

The rate at which the general level of prices for goods and services is rising, eroding purchasing power.

Consumer Price Index

A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care, used to estimate cost of living changes.

Market Basket

A selected group of goods and services used to track inflation and other economic indicators through price changes.

Base Year

A specific year against which economic growth is measured, serving as a standard point of comparison for real economic calculations such as GDP.