Asked by Paige Partin on Jun 09, 2024
Verified
A tariff is MOST likely to _____ prices and _____ domestic consumption of the good or service being protected.
A) decrease;increase
B) increase;decrease
C) have no effect on;not change
D) decrease;decrease
Domestic Consumption
This term refers to the total amount of goods and services consumed within a country's borders, indicating the level of domestic demand.
Tariff
A tax imposed by a government on imported or exported goods.
Protected
Shielded from harm, damage, or unwanted access, often through legal or regulatory means.
- Identify the effects of tariffs and other trade barriers on domestic markets.
Verified Answer
JM
Jahlyn MckieJun 15, 2024
Final Answer :
B
Explanation :
A tariff is a tax on imported goods, which makes them more expensive for consumers. As a result, it is most likely to increase prices for the protected good, as the tariff makes the imported good more expensive compared to the domestic good. This increase in price makes it more likely that consumers will choose to purchase the domestic good instead, thus decreasing consumption of the imported good. Therefore, the correct answer is B: increase prices and decrease domestic consumption of the good or service being protected.
Learning Objectives
- Identify the effects of tariffs and other trade barriers on domestic markets.