Asked by Katryna Rogerson on Jun 13, 2024
Verified
If a country imposes a tariff on imported shoes,we expect the domestic price of shoes to _____,domestic consumption to _____,and domestic production to _____.
A) fall;fall;fall
B) fall;rise;fall
C) rise;fall;rise
D) rise;rise;fall
Domestic Production
The total value of all goods and services produced within a country's borders in a given time period.
Imported Shoes
Footwear that is brought into a country from abroad for sale, typically subject to tariffs, quotas, or other trade regulations.
Domestic Price
The price of goods or services within a country's borders, as opposed to their price in the international market.
- Investigate the impact that tariffs and assorted trade barriers exert on domestic markets.
- Inspect the results of trade policies on the additional gains to producers and consumers.
Verified Answer
JS
jahliyah spellsJun 15, 2024
Final Answer :
C
Explanation :
When a country imposes a tariff on imported shoes, it increases the price of imported shoes. This makes domestic shoes more competitive and therefore, the domestic price of shoes rise. As the price of shoes increases, domestic consumers will buy fewer shoes, leading to a fall in domestic consumption. Also, as the domestic price of shoes increases, domestic producers will be incentivized to produce more shoes, leading to a rise in domestic production. Therefore, the correct answer is C.
Learning Objectives
- Investigate the impact that tariffs and assorted trade barriers exert on domestic markets.
- Inspect the results of trade policies on the additional gains to producers and consumers.