The most likely effects of tariffs and/or import quotas are to _____ prices and to _____ consumption of the protected goods in the importing country.

Question

Quizplus · Accepted Answer

Tariffs and import quotas typically raise prices of the protected goods by limiting the supply in the market. This results in higher profit margins for domestic producers of the same goods. However, the higher prices can also lead to lower consumption of these goods as consumers seek cheaper alternatives or reduce their overall purchasing. Therefore, the correct answer is B, which reflects both the rise in prices and the potential decrease in consumption.

The Most Likely Effects of Tariffs And/or Import Quotas Are