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
-Continued tariff protection for industries that have already attained all the possible economies of scale will likely

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
-Continued tariff protection for industries that have already attained all the possible economies of scale will likely

Quizplus · Accepted Answer

The diagram shows that with tariff protection, the domestic price of jeans (PD) is higher than the world price (PW). This means that consumers will have to pay a higher price for jeans produced in Canada. Tariff protection is likely to maintain high prices to consumers of the products produced in the protected industries, as the industries do not face competition from imports and may not have an incentive to lower prices.

The Diagram Below Shows the Domestic Demand and Supply Curves