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25 Nov 2020, 06:10
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Country A doubled the tariff on imported electronic goods so that they become costlier and the domestic electronic industry gets a boost. However, the volume of electronic goods imported into country A remained the same.
Which of the following helps to explain the paradox as to why the volume of electronic goods imported remained unchanged?
A. The cost of manufacturing electronic goods in country A is comparable to the cost of manufacturing them in the countries from which they are imported.
B. Most experts agree that the electronic goods manufactured in country A are as good as those imported from other countries.
C. This year the sale of electronic goods registered a 100% increase over last year.
D. Countries exporting electronic goods to country A reciprocated by increasing the tariff on goods imported from country A.
E. Most retailers in country A reported a fall in the percentage sale of imported electronic goods.
Which of the following helps to explain the paradox as to why the volume of electronic goods imported remained unchanged?
A. The cost of manufacturing electronic goods in country A is comparable to the cost of manufacturing them in the countries from which they are imported.
B. Most experts agree that the electronic goods manufactured in country A are as good as those imported from other countries.
C. This year the sale of electronic goods registered a 100% increase over last year.
D. Countries exporting electronic goods to country A reciprocated by increasing the tariff on goods imported from country A.
E. Most retailers in country A reported a fall in the percentage sale of imported electronic goods.
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25 Nov 2020, 13:27
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Country A doubled the tariff on imported electronic goods so that they become costlier and the domestic electronic industry gets a boost. However, the volume of electronic goods imported into country A remained the same.
Summary:
Tariff's provide an economic advantage for domestic companies.
But, the volume of imports are constant.
Ask:
Explain this.
Which of the following helps to explain the paradox as to why the volume of electronic goods imported remained unchanged?
A. The cost of manufacturing electronic goods in country A is comparable to the cost of manufacturing them in the countries from which they are imported.
Equivalent costs in separate countries should decrease the volume of goods.
B. Most experts agree that the electronic goods manufactured in country A are as good as those imported from other countries.
Equivalent quality of goods should also decrease the amount of imports since the domestic companies have an advantage.
C. This year the sale of electronic goods registered a 100% increase over last year.
This is out of scope. We don't care about and increase YoY.
D. Countries exporting electronic goods to country A reciprocated by increasing the tariff on goods imported from country A.
Yes. Equivalent tariffs balance the playing field and the flow of goods should be constant. (Selling goods on the other hand will be different)
E. Most retailers in country A reported a fall in the percentage sale of imported electronic goods.
This arises more questions since country A companies should be selling more goods.
Summary:
Tariff's provide an economic advantage for domestic companies.
But, the volume of imports are constant.
Ask:
Explain this.
Which of the following helps to explain the paradox as to why the volume of electronic goods imported remained unchanged?
A. The cost of manufacturing electronic goods in country A is comparable to the cost of manufacturing them in the countries from which they are imported.
Equivalent costs in separate countries should decrease the volume of goods.
B. Most experts agree that the electronic goods manufactured in country A are as good as those imported from other countries.
Equivalent quality of goods should also decrease the amount of imports since the domestic companies have an advantage.
C. This year the sale of electronic goods registered a 100% increase over last year.
This is out of scope. We don't care about and increase YoY.
D. Countries exporting electronic goods to country A reciprocated by increasing the tariff on goods imported from country A.
Yes. Equivalent tariffs balance the playing field and the flow of goods should be constant. (Selling goods on the other hand will be different)
E. Most retailers in country A reported a fall in the percentage sale of imported electronic goods.
This arises more questions since country A companies should be selling more goods.
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26 Nov 2020, 07:24
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OFFICIAL EXPLANATION
The given text says that. while the tariff on imported electronic goods has been doubled.
The volume of goods imported has remained unchanged. One thing that can explain this oddity is if the total volume of electronic goods sold has increased significantly so that the proportion of imported goods is less than what it was.
Option (C) says this and is the right answer.
Choice (A) says that the cost of manufacture in country A and the other countries is the same. So with a higher tariff
imported goods are costlier. So mis fails to explain why the volume of import has remained unchanged.
Choice (B) says that the quality of the domestic electronic goods is as good as the imported ones. So it fails to explain why people still buy imported ones.
Choice (C) says that me sale of electronic goods has increased 100%, that is. it has doubled. So the proportion of impeded goods to domestic goods sold has come down by half. This shows that domestic sales have increased significantly while the sale of imported goods is stagnant (because of the higher price resulting from higher tariff).
Choice (D) does not explain the sales situation in country A as it only talks of the reciprocal action of other countries.
Choice (E) could be true but it does not explain why the total sales of imported electronic goods is unchanged.
Choice (C) is the correct answer.
The given text says that. while the tariff on imported electronic goods has been doubled.
The volume of goods imported has remained unchanged. One thing that can explain this oddity is if the total volume of electronic goods sold has increased significantly so that the proportion of imported goods is less than what it was.
Option (C) says this and is the right answer.
Choice (A) says that the cost of manufacture in country A and the other countries is the same. So with a higher tariff
imported goods are costlier. So mis fails to explain why the volume of import has remained unchanged.
Choice (B) says that the quality of the domestic electronic goods is as good as the imported ones. So it fails to explain why people still buy imported ones.
Choice (C) says that me sale of electronic goods has increased 100%, that is. it has doubled. So the proportion of impeded goods to domestic goods sold has come down by half. This shows that domestic sales have increased significantly while the sale of imported goods is stagnant (because of the higher price resulting from higher tariff).
Choice (D) does not explain the sales situation in country A as it only talks of the reciprocal action of other countries.
Choice (E) could be true but it does not explain why the total sales of imported electronic goods is unchanged.
Choice (C) is the correct answer.
