Increasing a tariff _______ the domestic quantity consumed of the good and _______ the domestic production of the good.

Question

Quizplus · Accepted Answer

Increasing a tariff makes imported goods more expensive, which decreases the domestic consumption of these goods as consumers turn away from higher-priced imports. At the same time, it encourages domestic production because domestic goods become relatively cheaper compared to the now more expensive imports, leading to an increase in domestic production.

Increasing a Tariff _______ the Domestic Quantity Consumed of the Good