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 quantity consumed as consumers turn away from higher-priced imports. At the same time, it encourages domestic production because domestic goods become relatively cheaper compared to imports, leading to an increase in domestic production.

Increasing a Tariff ________ the Domestic Quantity Consumed of the Good