The automobile industry in Macroland successfully lobbies for import quotas that result in automobile prices that are $1,000 higher than before the quotas. Increased sales of automobiles produced in Macroland protect the jobs of 20,000 automobile workers. What is an additional consequence of the quotas that is not as attractive for Macroland's economy? Automobile producers in other countries will reduce the price of their cars to offset the higher prices required by the quotas. Each of Macroland's citizens who buys a car will have $1,000 less to spend on other products, leading to reduced sales and fewer jobs in other industries. The government will lose tax revenue. Consumers will buy more cars than before, pushing the automobile market out of equilibrium.

The automobile industry in Macroland successfully lobbies for import quotas that result in automobile prices that are $1,000 higher than before the quotas. Increased sales of automobiles produced in Macroland protect the jobs of 20,000 automobile workers. What is an additional consequence of the quotas that is not as attractive for Macroland's economy? Automobile producers in other countries will reduce the price of their cars to offset the higher prices required by the quotas. Each of Macroland's citizens who buys a car will have $1,000 less to spend on other products, leading to reduced sales and fewer jobs in other industries. The government will lose tax revenue. Consumers will buy more cars than before, pushing the automobile market out of equilibrium.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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