With Free Trade, the Market for a Particular Good or Service

question 13

Multiple Choice

With free trade, the market for a particular good or service is in equilibrium when:

• A) domestic supply is at its maximum possible level.
• B) there are no exports to the world market.
• C) imports into the domestic market are zero.
• D) the price in the world market is equal to the price in the domestic market.
• E) the domestic demand for the good equals the domestic supply of the good.

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Definitions:

EBIT

Earnings Before Interest and Taxes; a measure of a firm's profit that includes all income and expenses except interest and income tax expenses.

Income Statement

A financial statement that shows a company's income and expenses over a specific period, culminating in net profit or loss.

After-Tax Income

The amount of income an individual or corporation retains after all applicable taxes have been deducted.

Depreciation

The accounting process of allocating the cost of a tangible asset over its useful life, reflecting wear and tear or obsolescence.