A small wine and cheese store in Milwaukee sells dozens of different type of cheese: Bulgarian, French, Danish, Greek, and a domestic from its home state of Wisconsin. The domestic Wisconsin cheese sells for $1.99/pound, while all the others sell for more than $2.99/pound, and the Greek variety is priced at $6.99/pound. The domestic variety is much cheaper because
A) customers always perceive the domestic varieties to be of lower quality than the imported varieties.
B) the value of the dollar never favors imported goods.
C) imported cheese producers often pay protective tariffs on these goods, which ultimately raises the price at the grocery store.
D) the distributors of these imports refuse to buy the cheese in large enough quantities to enjoy economies of scale.

Question

Quizplus · Accepted Answer

Protective tariffs (import taxes) are assessed on imports to protect and grow domestic industries. The protective tariffs raise the price of imported products so domestic goods are more competitively priced.

A Small Wine and Cheese Store in Milwaukee Sells Dozens