The diagram below shows the demand and supply curves for refrigerators in Canada.
FIGURE 34- 1
-Assume Canada is trading with a country that has lower costs of production for some good and can therefore sell that good at a lower price. If Canada imposes a tariff large enough to equalize the foreign country's price with ours, then

Question

The diagram below shows the demand and supply curves for refrigerators in Canada.
  FIGURE 34- 1
-Assume Canada is trading with a country that has lower costs of production for some good and can therefore sell that good at a lower price. If Canada imposes a tariff large enough to equalize the foreign country's price with ours, then

Quizplus · Accepted Answer

Imposing a tariff to equalize the foreign country's price with Canada's would reduce the gains from international specialization because it would make it less advantageous for Canada to import the good from the lower-cost producer. This could lead to Canada producing the good domestically instead of importing it, which would result in higher costs and reduced efficiency. Therefore, the gains from international specialization would be reduced. None of the other choices are accurate statements in this context.

The Diagram Below Shows the Demand and Supply Curves for Refrigerators