Question

If the government imposes a limit on sales of a good or service by licensing the right to sell a given quantity of the good, the difference between the demand and supply price is Select one: A the quota rent B. the equilibrium price. O C. the quota price D. deadweight loss Next page

Answer 1

Answers

1 Quota Rent

Its is the DIfference between the demand price and the supply price at quota level.

2 import sweaters from Britain and export machinery to Britain

As per the theory of Comparative Advantage, a country should export the good , which it produces at a lower opportunity cost and import the good which had a higher oppotunity cost to produce. It dictates that a nation should specialise in the good which it makes more efficiently

3.A. Actions ; rivals ; reaction

In oligopoly , there are few large firms who solely produce the good. They are always in close communication so that they are not highly competitive with each other , and lower their profits

4.D. a 20% increase in the price of foreign travel will increase quantity demanded by 80%

The positive price elasticity denotes that the good does not follow the law of demand , its probably falls under Veblan or Giffen good category.

PED = % change in quantity / % change in price

here,

4 = % change in quantity / 20%

or % change in quantity = 80 %

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