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Basic Question 11 of 17
Refer to the graph below of a small country that is a price-taker internationally. Assume the foreign supply of this product is perfectly elastic at a price of $4 per unit. Starting from a free trade equilibrium, a tariff in the amount of $2 per unit would be expected to cause domestic production to ______
B. increase from 2400 to 3600.
C. decrease from 4800 to 3600.
A. increase from 6100 to 7400.
B. increase from 2400 to 3600.
C. decrease from 4800 to 3600.
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Martin Rockenfeldt
Learning Outcome Statements
compare types of trade restrictions, such as tariffs, quotas, and export subsidies, and their economic implications
CFA® 2024 Level I Curriculum, Volume 1, Module 6.