The diagram below shows the domestic demand and supply curves for denim jeans in Canada.The prevailing world price is PW.Assume that all jeans are identical.
FIGURE 34- 2
-Assume Canada is trading with a country that has lower costs of production for some good and can therefore sell that good at a lower price.If Canada imposes a tariff large enough to equalize the foreign country's price with ours,then

Question

The diagram below shows the domestic demand and supply curves for denim jeans in Canada.The prevailing world price is PW.Assume that all jeans are identical.
  FIGURE 34- 2
-Assume Canada is trading with a country that has lower costs of production for some good and can therefore sell that good at a lower price.If Canada imposes a tariff large enough to equalize the foreign country's price with ours,then

Quizplus · Accepted Answer

By imposing a tariff large enough to equalize the foreign country's price with ours, Canada would be reducing the gains from international specialization. This is because the foreign country has a comparative advantage in producing the good in question due to its lower costs of production, and the tariff would make it more difficult for Canada to import the good at a lower cost from that country. Therefore, the tariff would reduce the efficiency gains from trading with other countries and hinder the process of international specialization.

The Diagram Below Shows the Domestic Demand and Supply Curves