Imposing a tariff on the import of a good _____ the quantity supplied domestically and _____ the quantity demanded compared to free trade.

Question

Quizplus · Accepted Answer

Imposing a tariff on the import of a good increases the quantity supplied domestically because domestic producers are more competitive with the higher prices of imported goods. It decreases the quantity demanded because the higher prices from the tariff make the good more expensive for consumers, leading to a decrease in demand compared to a situation of free trade.

Imposing a Tariff on the Import of a Good _____