The small country of Bascovina wanted to protect its infant basket industry and imposed a 400 percent tariff on all imported baskets. The high tariff dropped the bottom out of imported basket sales, and imports of baskets stops. Why did this happen?
A) The citizens realized that because the government imposed the tariff, imported basket purchases were undesirable.
B) The tariff reduced the price of imported baskets and consumers felt that because of the low prices, the baskets were of low quality and stopped their purchases.
C) The tariff barred all shipments of baskets to Bascovina.
D) The tariff makes the price of imported baskets so high that they are not competitive.
Correct Answer:
Verified
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