When a tariff or a quota is imposed on an import, the domestic industry benefits from higher prices and increased output.

Question

Quizplus · Accepted Answer

When a tariff or quota is imposed on an import, it increases the cost of importing and thus domestic firms may increase their prices to match or slightly undercut the price of the foreign good. This can result in increased revenue for the domestic industry and may lead to increased output to meet demand.

When a Tariff or a Quota Is Imposed on an Import