The finance minister of a province that has many textile firms wants to impose tariffs on all imported textiles.Which of the following is NOT a likely consequence of such tariffs

Question

Quizplus · Accepted Answer

Imposing tariffs on imported textiles is likely to protect domestic textile sellers from foreign competition, allowing them to charge higher prices and gain producer surplus. However, this protectionist policy is unlikely to have any direct impact on the rate of technological advance among domestic textile sellers. In fact, by shielding domestic textile firms from international competition and reducing their incentives to innovate and improve their products, tariffs may actually lead to a slower rate of technological advance. Therefore, (C) is the correct choice as it is not a likely consequence of the tariff.

The Finance Minister of a Province That Has Many Textile