The diagram below shows the demand and supply curves for refrigerators in Canada.
FIGURE 34- 1
-Refer to Figure 34- 1. Suppose that P0 is the world price. If Canada imposes a tariff causing the price of refrigerators in Canada to rise from P0 to P1, the consequence would be that
A) domestic production will increase from Q1 to Q3 and domestic consumption will fall from Q5 to Q3.
B) domestic production will exceed domestic consumption.
C) domestic production will increase from Q1 to Q2 and domestic consumption will fall from Q5 to Q4.
D) both domestic production and domestic consumption would increase by equal amounts.
E) both domestic production and domestic consumption would decrease by equal amounts.
Correct Answer:
Verified
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