Suppose the country of Atlantica imposes a tariff on foreign-produced cars. As a result of the tariff,

Question

Quizplus · Accepted Answer

When a tariff is imposed on foreign-produced cars, the price of these cars will increase, making them less attractive to consumers in Atlantica. As a result, the demand for foreign-produced cars will decrease, leading to a decrease in the number of imported cars. At the same time, the tariff revenue collected by the government in the Atlantica will increase, as importers will have to pay a fee to import foreign-produced cars into the country. Therefore, option B is the correct choice. Option A is incorrect as there will be a decrease in the number of imported cars. Option C is incorrect as there might not be any efficient trade agreements between Atlantica and its trade partners. Option D is incorrect as the gains from trade will decrease due to the tariff.

Suppose the Country of Atlantica Imposes a Tariff on Foreign-Produced