The figure shows the market for shirts in the United States, where D is the domestic demand curve and S is the domestic supply curve. The world price is $20 per shirt. The United States imposes a tariff on imported shirts, $4 per shirt.
-In the figure above, the tariff_________ the domestic production of shirts in the United States by_________ per year.

Question

Quizplus · Accepted Answer

A tariff typically increases domestic production by making imported goods more expensive, thus encouraging domestic production. The figure suggests an increase of 8 million shirts per year.

The Figure Shows the Market for Shirts in the United