Refer to the information provided in Figure 4.5 below to answer the question(s) that follow. Figure 4.5
-Refer to Figure 4.5. Assume that initially there is free trade. If the United States then imposes a $10.00 tariff per CD-Rom drive on imported CD-Rom drives,
A) the quantity of CD-Rom drives demanded will be reduced by 3 million.
B) the quantity of CD-Rom drives supplied by U.S. firms will increase by 3 million.
C) the price of CD-Rom drives in the United States will increase to $25.
D) all of the above

Question

Refer to the information provided in Figure 4.5 below to answer the question(s) that follow.  Figure 4.5
-Refer to Figure 4.5. Assume that initially there is free trade. If the United States then imposes a $10.00 tariff per CD-Rom drive on imported CD-Rom drives,
A) the quantity of CD-Rom drives demanded will be reduced by 3 million. 
B) the quantity of CD-Rom drives supplied by U.S. firms will increase by 3 million. 
C) the price of CD-Rom drives in the United States will increase to $25. 
D) all of the above

Quizplus · Accepted Answer

Imposing a tariff increases the price of imported goods, making domestic products more competitive. This leads to a decrease in demand for the more expensive imported goods, an increase in supply from domestic producers as they ramp up to meet the shifted demand, and an overall increase in the market price of the good in question, in this case, CD-Rom drives. Thus, all of the statements A, B, and C are correct outcomes of imposing a tariff.

Refer to the Information Provided in Figure 4