A protective tariff will

Question

Quizplus · Accepted Answer

A protective tariff will increase the price of foreign goods, making them less attractive to consumers and increasing the demand for domestic goods. This, in turn, will increase the sales and price of domestic producers who are now more competitive in the market. However, it may also lead to a decrease in welfare for domestic consumers who now have to pay higher prices for goods. There may not necessarily be an efficiency gain in the domestic economy as protectionist policies may lead to a decrease in overall economic growth in the long run.

A Protective Tariff Will