29 Questions
What is the result of FDI in Ireland's Pharmaceuticals industry?
Employment expands
How does the FDI influence the nominal wage in Ireland?
The nominal wage increases
What happens to the marginal product of Labor after immigration from Poland?
The marginal product of Labor decreases
What is the result of FDI in Ireland's Beer industry?
Employment contracts
What is the relationship between Labor and R&D Labs in the production of Pharmaceuticals?
Labor and R&D Labs are complements
What is the result of immigration from Poland on the real wage in Ireland?
The change in real wage is ambiguous
What happens to the marginal product of Labor and Capital when a certain phenomenon occurs?
The marginal product of Labor falls, and the marginal product of Capital rises
What is called when countries specialize in different varieties of the same type of product and trade them?
Intra-industry trade
What opportunity does international trade allow a monopolistically competitive firm in the long run?
Produce more output and reduce its average costs
What are the monopoly profits of the firm if it only sells in the domestic market?
$250
Should the firm enter the foreign market?
Yes, because it can increase its monopoly profits
What is the extra monopoly profits that the firm will earn if it enters the foreign market?
$125
What is the definition of dumping in a foreign market?
Selling to the foreign market below its domestic price
What is the effect of the tariff on the producer surplus in the Home country?
It increases by $64.
What is the amount of government revenue generated due to the tariff?
$48
What is the deadweight loss due to the tariff?
$12
How many stages of production are involved in the production of TVs?
3
What is the only raw material required for the production of TVs?
Copper
What would be the consequence of the transportation costs being high in the UK?
The company would start sourcing copper from the UK
What is the primary effect of the import quota on the US textile market?
Increase in domestic textile production
What does the graph illustrates after the import quota is imposed?
An increase in the quota rents
What is the relationship between the freetrade amount of imports and the import quota q?
q is less than the freetrade amount of imports
What would happen to the textile imports into the US after the import quota is imposed?
The textile imports would decrease
What is the purpose of the import quota in the context of the problem?
To limit the amount of textile imports
What is the revenue that the government gets from auctioning off the right to import textiles into the U.S.?
Area d
What is the net change in welfare as a result of the import quota if the foreign producers are able to sell to the U.S at the prevailing U.S. domestic price?
Area a - Area b - Area c
How does the net change in welfare as a result of the import quota compare between the two scenarios?
The net change in welfare is lower when the foreign producers are able to sell at the prevailing U.S. domestic price
What is the area on the graph that represents the revenue generated by the government from the import quota?
Area d
What is the effect of the import quota on the domestic price of textiles in the U.S.?
The domestic price increases
Test your understanding of the effects of foreign direct investment on a country's economy, specifically in the context of Ireland's pharmaceutical and beer industries. How does an increase in R&D Labs impact employment and production? Take this quiz to find out!
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