Suppose Canada has a 12% tariff on foreign-made cotton clothing.If the tariff is raised to 20%,there will be a ________ in the Canadian price of cotton clothing,________ profits for domestic producers,and ________ in deadweight loss.

Question

Quizplus · Accepted Answer

Raising the tariff on foreign-made cotton clothing to 20% would increase the Canadian price of these goods due to the higher cost of importing them. This, in turn, would likely increase profits for domestic producers as their goods become relatively cheaper compared to the imported goods. Additionally, the higher tariff would lead to an increase in deadweight loss due to reduced efficiency in the market, as consumers pay more and some beneficial trades do not occur.

Suppose Canada Has a 12% Tariff on Foreign-Made Cotton Clothing