Suppose that the domestic production of computer games creates enjoyment for those who play the games. Domestic production of computer games also results in knowledge spillovers that positively impact many other industries. One possible policy that could be employed to encourage increased production of computer games by domestic firms is:
A)to impose tariffs on computer game imports.
B)to tax the production of computer games.
C)to tax the consumption of computer games.
D)to eliminate all restrictions on the importation of computer games.

Question

Quizplus · Accepted Answer

Imposing tariffs on computer game imports makes domestically produced games more competitive against foreign games, potentially increasing domestic production. This policy can encourage domestic firms to produce more, taking advantage of the protective measure to expand their market share in the domestic market.

Suppose That the Domestic Production of Computer Games Creates Enjoyment