Based on Figure 6.1,given a tariff of $0.25 per bushel on soybean imports,how much will domestic production increase?
A)Domestic firms will increase output by 10 million bushels.
B)Domestic firms will increase output by 20 million bushels.
C)Domestic firms will increase output by 70 million bushels.
D)Domestic firms' production will not be changed by the tariff.

Question

Quizplus · Accepted Answer

A tariff on imports makes imported goods more expensive, encouraging consumers to buy domestically produced goods instead. This leads to an increase in domestic production to meet the shifted demand.