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, domestic consumption of domestically produced wallets will be ________ wallets and domestic consumption of imported wallets will be ________ wallets.

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, domestic consumption of domestically produced wallets will be ________ wallets and domestic consumption of imported wallets will be ________ wallets.

Quizplus · Accepted Answer

With a tariff, the domestic price of a leather wallet is $15, which is higher than the world price of $10. This will lead to a decrease in imports and an increase in domestic production. The domestic consumption of domestically produced wallets will increase from 100 to 150, and the domestic consumption of imported wallets will decrease from 250 to 100.

Refer to the Information Provided in Figure 18