(Table: US

question 9

Multiple Choice

(Table: U.S. Demand for and Supply of Widgets) The United States can import widgets from China at $4 each and from Mexico at $5 each. The United States imposes a tariff of $2 on each of its widget imports. Suppose that the United States and Mexico form a free-trade area. How much trade in widgets is diverted in the U.S.-Mexican free-trade area?

• A) 0 widgets
• B) 2 widgets
• C) 4 widgets
• D) 6 widgets

Identify the components and consequences of deadweight loss in monopoly pricing.

Understand the concept and implications of perfect price discrimination by monopolists.

Relate the concepts of consumer surplus and deadweight loss to the efficiency of monopolies and perfectly competitive firms.

Understand the concept of price discrimination and its impact on consumer groups.