A tariff is placed on rosewood, a type of wood that is used to make ukuleles. What effect will this have on the equilibrium price and quantity of ukuleles?

Question

Quizplus · Accepted Answer

When a tariff is placed on rosewood, the cost of production for ukuleles increases. This leads to a higher price for consumers and a decrease in the quantity demanded, hence the equilibrium quantity of ukuleles decreases.

A Tariff Is Placed on Rosewood, a Type of Wood