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. The quantity of CD-Rom drives supplied by U.S. firms will increase by 3 million CD-Rom drives if the United States then imposes ________ tax per CD-Rom drive on imported CD-Rom drives.
A) no
B) a $10
C) a $15
D) a $25

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. The quantity of CD-Rom drives supplied by U.S. firms will increase by 3 million CD-Rom drives if the United States then imposes ________ tax per CD-Rom drive on imported CD-Rom drives.
A) no 
B) a $10 
C) a $15 
D) a $25

Quizplus · Accepted Answer

A tax on imported CD-Rom drives would make imported drives more expensive, encouraging consumers to buy domestically produced drives instead. A $10 tax is likely to be sufficient to shift demand from imported to domestic drives, increasing the quantity supplied by U.S. firms.

Refer to the Information Provided in Figure 4