Which of the following situations will arise in the domestic market following the imposition of a tariff?

Question

Quizplus · Accepted Answer

When a tariff is imposed, it increases the cost of imported goods, making them more expensive than domestic products. As a result, demand for imports decreases, and domestic producers have a competitive advantage, leading to an increase in domestic production. However, since the domestic producers are now competing with fewer imported goods, they can raise their prices, resulting in price increases. Therefore, the option A describes the situation that arises in the domestic market following the imposition of a tariff.

Which of the Following Situations Will Arise in the Domestic