If, as a result of trade policy, domestic firms overproduce and consumers underconsume it is likely that a
______ has been applied.

Question

Quizplus · Accepted Answer

A tariff, which is a tax on imports, can lead to domestic firms overproducing because their goods become relatively cheaper compared to foreign goods. This can also lead to consumers underconsuming imported goods due to their higher prices, making B the correct choice.

If, as a Result of Trade Policy, Domestic Firms Overproduce