Which of the following chain of events occurs when a tariff is imposed on a good?
A) Domestic prices rise, shifting the domestic supply curve rightward.
B) Domestic prices fall, shifting the demand curve rightward, and consumers buy more of the good.
C) Domestic prices fall, decreasing the domestic quantity supplied and increasing the quantity demanded.
D) Domestic prices rise, decreasing the quantity demanded and increasing the domestic quantity supplied.
E) Domestic prices rise, shifting the demand curve leftward and the domestic supply curve rightward.

Question

Quizplus · Accepted Answer

When a tariff is imposed on a good, domestic prices typically rise because the cost of importing the good increases. This leads to a decrease in the quantity demanded (since consumers are less willing or able to purchase the good at higher prices) and an increase in the domestic quantity supplied (since domestic producers are more willing to produce the good at higher prices).

Which of the Following Chain of Events Occurs When a Tariff