Import tariffs generally result in:
A) higher domestic prices.
B) less consumer surplus.
C) more producer surplus for domestic producers.
D) a deadweight loss.
E) all of the above

Question

Quizplus · Accepted Answer

All of the above are potential results of import tariffs. Tariffs increase the cost of imported goods, leading to higher domestic prices for consumers. This reduces consumer surplus, as buyers are forced to pay more for the same goods. At the same time, domestic producers benefit from the tariff, as they face less competition from foreign firms and can raise their prices accordingly, leading to more producer surplus. However, there is also a deadweight loss associated with tariffs, as some domestic producers may reduce their output due to higher costs, and some consumers may switch to substitute goods or simply consume less overall.

Import Tariffs Generally Result In