If imports licenses are auctioned off to domestic importers in competitive market their scarcity value (revenue effect) accrues to ?
Correct answer: D. The domestic government
- A. foreign corporations
- B. foreign workers
- C. domestic corporations
- D. The domestic government
Explanation
When import licences are auctioned competitively, the scarcity rent is captured by whoever sells the licences. Since the government conducts the auction, this revenue accrues to the domestic government rather than importers.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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