Explanation The import restrictions include the imposing of the tariffs on the goods and services that are being imported and setting the quota on the quantity of imports. Tariffs are the monetary barriers imposed on the imports. When there are tariffs, it will increase the cost of the imports. As a result, the price of imports will increase in the economy. Then, the consumers have to pay more to consume the goods, which reduces the standard of living of the consumers. The quota limitation is a non-monetary restriction that sets a quantity limit for importing. When the demand is higher than the importing quota, it will lead to higher demand and price in the economy, which also adversely affect the standard of living of the consumers. Thus, statement (a) is correct. Statement (b) states that there will be trade restrictions in the real world even when the trade restrictions reduce the standard of living of the consumers in the economy...

Economics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN: 9781305506725

Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher: Cengage Learning

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Question

Definition Video Definition Ability of a country to produce goods and services at a lower opportunity cost compared to other countries. Here, opportunity cost refers to the forgone units of one good in order to produce one more unit of another good. For example, the opportunity cost of producing good X in country A is 2Y and in country B is 1.25Y. Country B has a lower opportunity cost of producing good X than country A. Therefore, country B has a comparative advantage in the production of good X. Video

Chapter 18, Problem 4CQ

To determine

Inefficiency and import restrictions.

Expert Solution & Answer

Chapter 18 Solutions

Economics: Private and Public Choice (MindTap Course List)

Ch. 18 - Prob. 1CQ Ch. 18 - Prob. 2CQ Ch. 18 - Prob. 3CQ Ch. 18 - Prob. 4CQ Ch. 18 - Prob. 5CQ Ch. 18 - Prob. 6CQ Ch. 18 - Prob. 7CQ Ch. 18 - Prob. 8CQ Ch. 18 - Prob. 9CQ Ch. 18 - Prob. 10CQ

Ch. 18 - Prob. 11CQ Ch. 18 - Prob. 12CQ Ch. 18 - Prob. 13CQ Ch. 18 - Prob. 14CQ Ch. 18 - Prob. 15CQ Ch. 18 - Prob. 16CQ Ch. 18 - Prob. 17CQ

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If opening up to free trade would benefit a nation, then why do nations not just eliminate their trade barriers, and not bother with international trade negotiations?

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