Reducing a tariff will ________ the domestic production of the good and ________ the total domestic consumption of the good.

Question

Quizplus · Accepted Answer

Reducing a tariff on an imported good makes the imported good cheaper relative to domestically produced goods, which typically leads to a decrease in domestic production as domestic goods become less competitive. However, it also makes the overall market price lower, encouraging an increase in total domestic consumption of the good as consumers can now afford to buy more.

Reducing a Tariff Will ________ the Domestic Production of the Good