Import restrictions due to the imposition of tariffs by the U.S. government
A)will ultimately cause inefficient resource allocation in the United States.
B)will lead to lower incomes in the economy of U.S. trade partners.
C)will lead to a decline in the quantity of the product consumed in the United States.
D)all of the above are likely to occur

Question

Quizplus · Accepted Answer

When the US imposes tariffs and import restrictions, it makes it more expensive for domestic producers to import the product they need at a lower cost from foreign producers. This may lead to inefficient allocation of resources, as domestic producers might be investing more in the production of an inefficient substitute. Moreover, when trade is restricted, it generally leads to decreased exports and lower incomes in the economy of US trade partners. Furthermore, with a decline in the quantity of the product consumed, the consumption patterns of U.S. consumers may change, altering the demand for other goods and services. Therefore, all the choices mentioned above are likely to occur when import restrictions are imposed.

Import Restrictions Due to the Imposition of Tariffs by the U.S