If Italy imposes a tariff on imported shoes, we should expect the domestic price of shoes in Italy to _____, the domestic consumption of shoes to _____, and the domestic production of shoes to _____.

Question

Quizplus · Accepted Answer

When a tariff is imposed on imported shoes, the price of imported shoes will increase, making them less attractive to Italian consumers. Therefore, they will shift their consumption to domestic shoes, increasing the demand for domestic shoes and causing their price to rise. Meanwhile, domestic shoe producers will expand their production to meet the increased demand for their products, resulting in an increase in domestic production of shoes.

If Italy Imposes a Tariff on Imported Shoes, We Should