The production side efficiency loss of a tariff is caused by
A)higher profits gained by foreign producers.
B)the expansion of relative inefficient domestic production.
C)the contraction of domestic consumption.
D)the increase in government revenue.

Question

Quizplus · Accepted Answer

Tariffs can protect inefficient domestic producers from foreign competition, which can lead to a decrease in production efficiency. Domestic producers may become complacent and not focus on improving their production processes because they are sheltered from foreign competition. This can result in higher costs, lower quality, and reduced productivity in the long term. Therefore, the expansion of relatively inefficient domestic production is the primary cause of production side efficiency loss from tariffs.

The Production Side Efficiency Loss of a Tariff Is Caused