If a small country imposes a tariff on imported motorcycles, the world price of motorcycles will _____ and the domestic price of motorcycles will _____.
A)rise; fall
B)fall; rise
C)remain constant; rise
D)remain constant; fall

Question

Quizplus · Accepted Answer

Imposing a tariff on imported motorcycles does not affect the world price, as the world market is much larger than the small country's market. However, the domestic price will rise due to the added cost of the tariff on imports.

If a Small Country Imposes a Tariff on Imported Motorcycles