Refer to the information provided in Figure 18.4 below to answer the questions that follow. Figure 18.4
-Refer to Figure 18.4. The domestic price of a leather wallet is $20. With free trade the price of a leather wallet is $10 and after a tariff is imposed the price is $15. After the tariff is imposed,

Question

Refer to the information provided in Figure 18.4 below to answer the questions that follow.  Figure 18.4
-Refer to Figure 18.4. The domestic price of a leather wallet is $20. With free trade the price of a leather wallet is $10 and after a tariff is imposed the price is $15. After the tariff is imposed,

Quizplus · Accepted Answer

After the tariff is imposed, the domestic price of a leather wallet increases to $15, which is still lower than the original domestic price of $20. This makes domestic production more profitable, leading to an increase in domestic production by 50 wallets. However, since the price of imported leather wallets is now $15, domestic consumers will switch to imported wallets, leading to a decrease in domestic consumption by 50 wallets. Therefore, domestic production will increase by 50 wallets and domestic consumption will decrease by 50 wallets.

Refer to the Information Provided in Figure 18