A tariff placed on a foreign good will
A) reduce the price of a competing domestic good.
B) increase the price of a competing domestic good.
C) increase the quantity sold of both the foreign and competing domestic good.
D) reduce the quantity sold of both the foreign and competing domestic good.

Question

Quizplus · Accepted Answer

Placing a tariff on a foreign good increases its price, making it less competitive compared to domestic goods, leading consumers to switch to domestic goods. This increased demand for domestic goods allows domestic producers to increase prices as well, resulting in the increase of the price of the competing domestic good.

A Tariff Placed on a Foreign Good Will