Suppose France increased the tariff on wine imported from Spain, and in retaliation Spain decreased the quota on perfumes France can export to Spain. What might one expect to be the result?
A) the amount of Spanish wine France imports to decrease and the number of French perfumes Spain imports to decrease
B) French consumers to pay higher prices for Spanish wine and the number of French perfumes Spain imports to decrease
C) French consumers to pay lower prices for Spanish wine and Spanish consumers to pay lower prices for French perfumes
D) the amount of Spanish wine France imports to decrease and the number of French perfumes Spain imports to increase

Question

Quizplus · Accepted Answer

When France increases the tariff on wine imported from Spain, the price of Spanish wine in France will increase, and French consumers will likely turn to domestic wine or find alternatives. In retaliation, Spain could decrease the quota on perfumes France can export to Spain, causing the number of French perfumes imported to decrease. This could lead to higher prices for French perfumes in Spain.

Suppose France Increased the Tariff on Wine Imported from Spain