A tariff is imposed on a good. The tariff will _______ the domestic quantity supplied,_______ the domestic quantity demanded, and _______ price in the home country.

Question

Quizplus · Accepted Answer

A tariff on a good typically increases the domestic quantity supplied because domestic producers are more competitive against higher-priced imports. It decreases the domestic quantity demanded because the higher prices lead consumers to buy less. Finally, it increases the price in the home country because the cost of imports plus the tariff is higher than the original price of imports.

A Tariff Is Imposed on a Good