Suppose that Peru increases tariffs on food products imported from Mexico. What is the desired effect of this tariff?
A) to increase the price of the imports and increase the amount of the imports
B) to increase the price of the imports and decrease the amount of the imports
C) to decrease the price of the imports and increase the amount of the imports
D) to decrease the price of the imports and decrease the amount of the imports

Question

Quizplus · Accepted Answer

By increasing tariffs on food products imported from Mexico, Peru aims to make these products more expensive for consumers, making them less attractive and reducing their demand. This will likely lead to a decrease in imports from Mexico, hence reducing competition for local producers and potentially boosting domestic industries. Therefore, the desired effect of this tariff is to increase the price of imports and decrease their amount.

Suppose That Peru Increases Tariffs on Food Products Imported from Mexico