Reducing a tariff will _______ the domestic production of the good and _______ the total domestic consumption of the good.

Question

Quizplus · Accepted Answer

Reducing a tariff on an imported good makes the imported good cheaper relative to domestically produced goods, leading to a decrease in domestic production as consumers switch to the cheaper imports. At the same time, the lower price increases the total consumption of the good domestically.

Reducing a Tariff Will _______ the Domestic Production of the Good