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The correct option that would result if country C imposed an import quota on cell phones.
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Answer to Problem 5MCQ
Option d is correct.
Explanation of Solution
Explanation for the correct option:
d.
Import quota refers to a type of restriction where countries are defined to import a certain percentage of quantity not beyond that. Country C’s population would be forced to purchase cell phones manufactured in country C only. Therefore, option d is correct.
Explanation for incorrect options:
a.
Prices of cell phones will not increase instead demand for domestic goods will increase. Therefore, option a is the incorrect answer.
b.
Import quotas will restrict buying outside country C which will reduce their tax collection. Therefore, option b is incorrect.
c.
Import quotas will restrict trade from outside the country. Therefore, option c is incorrect.
e.
The imposition of import quotas will restrict trade from all sources. Therefore, option e is incorrect.
International trade: International trade is an exchange of goods and services across nations. This is due to globalization and
Chapter 44 Solutions
Krugman's Economics For The Ap® Course
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