In 2017,President Trump considered imposing a tariff on automobiles assembled by U.S.manufacturers in Mexico that were to be sold in the United States.If this tariff was imposed and as a result,some of these manufacturers moved their automobile assembly from Mexico back to the United States,these firms would be reacting to which of the three key economic ideas?
A)Firms attempt to maximize revenues.
B)Optimal decisions are made at the margin.
C)People are rational.
D)People respond to economic incentives.

Question

Quizplus · Accepted Answer

The firms would be responding to economic incentives - the higher tariff on automobiles from Mexico would create a disincentive for the firms to produce in Mexico and an incentive to produce in the US.

In 2017,President Trump Considered Imposing a Tariff on Automobiles Assembled