The effect of a tariff or a quota is to
A)raise the price of a commodity in the exporting country above the price in an importing country.
B)raise the price of a commodity in an importing country above the price in the exporting country.
C)lower the price of the commodity in all countries.
D)raise the price of the commodity in all countries.

Question

Quizplus · Accepted Answer

A tariff or a quota restricts imports, therefore reducing the supply of the commodity in the importing country, leading to an increase in price. The exporting country may also reduce its price to remain competitive, but the overall effect is an increase in price in the importing country compared to the exporting country. Thus, option B is the best choice.

The Effect of a Tariff or a Quota Is to