The diagram below shows the demand and supply curves for refrigerators in Canada.
FIGURE 34- 1
-Many people argue that the imposition of tariffs in industry X will increase factor incomes in that industry and therefore be good for the country as a whole.The counter- argument is that

Question

The diagram below shows the demand and supply curves for refrigerators in Canada.
  FIGURE 34- 1
-Many people argue that the imposition of tariffs in industry X will increase factor incomes in that industry and therefore be good for the country as a whole.The counter- argument is that

Quizplus · Accepted Answer

The imposition of tariffs in industry X may increase factor incomes in that industry, but it would also likely lead to decreased consumption and the loss of jobs in other industries. This would cause a reduction in real incomes for all other domestic residents, offsetting any gains in industry X. Therefore, while factor incomes may increase in industry X, the overall effect on the economy may be negative as resources are shifted away from more efficient uses.

The Diagram Below Shows the Demand and Supply Curves for Refrigerators