"Tariffs and other trade restrictions increase the domestic scarcity of products from abroad. Such policies benefit domestic producers of the restricted products at the expense of domestic consumers." This statement:
A) contains one error; the trade restraints do not increase the scarcity of foreign-produced goods.
B) contains one error; domestic producers gain at the expense of foreign producers rather than domestic consumers.
C) contains two errors; trade restraints do not increase the domestic scarcity of product and neither do they harm domestic consumers.
D) is essentially correct.

Question

Quizplus · Accepted Answer

The statement is essentially correct because tariffs and other trade restrictions do indeed increase the domestic scarcity of products from abroad by making them more expensive or harder to obtain, which benefits domestic producers by reducing foreign competition. However, this is at the expense of domestic consumers, who face higher prices and less choice.

"Tariffs and Other Trade Restrictions Increase the Domestic Scarcity of Products