Refer to the information provided in Figure 4.5 below to answer the questions that follow. Figure 4.5
-Refer to Figure 4.5. Assume that initially there is free trade. If the United States then imposes a $10.00 tax per CD-Rom drive on imported CD-Rom drives,
A) the quantity of CD-Rom drives demanded will be reduced by 6 million.
B) the quantity of CD-Rom drives supplied by U.S. firms will increase by 3 million.
C) the price of CD-Rom drives in the United States will decrease to $5.
D) U.S. imports of CD-Rom drives will increase by 3 million.

Question

Refer to the information provided in Figure 4.5 below to answer the questions that follow.  Figure 4.5
-Refer to Figure 4.5. Assume that initially there is free trade. If the United States then imposes a $10.00 tax per CD-Rom drive on imported CD-Rom drives,
A) the quantity of CD-Rom drives demanded will be reduced by 6 million. 
B) the quantity of CD-Rom drives supplied by U.S. firms will increase by 3 million. 
C) the price of CD-Rom drives in the United States will decrease to $5. 
D) U.S. imports of CD-Rom drives will increase by 3 million.

Quizplus · Accepted Answer

The imposition of a tax on imported goods typically leads to an increase in domestic production as domestic firms become more competitive relative to the now more expensive imports.

Refer to the Information Provided in Figure 4