When the Canadian government imposes a tariff,

Question

Quizplus · Accepted Answer

When the Canadian government imposes a tariff, it increases the price of the imported goods, making them less attractive to Canadian consumers. This leads to an increase in domestic production, which may not be as efficient as the imported goods, resulting in higher costs of production. This leads to a social loss, as increased domestic production could have been obtained at a lower cost by importing the goods rather than producing them domestically. While some domestic producers may benefit from the tariff, the overall welfare of the society is reduced due to the increased costs of production and consumption. Tariff revenue earned by the government can be used for public goods and services, and therefore cannot be considered a social loss.

When the Canadian Government Imposes a Tariff