A tariff
A)makes domestic consumers better off.
B)makes both domestic producers and consumers better off.
C)makes everyone worse off.
D)makes domestic producers better off.

Question

Quizplus · Accepted Answer

A tariff is a tax on imported goods, which makes them more expensive for domestic consumers. This may lead to an increase in demand for domestically produced goods, making domestic producers better off. However, it also raises prices for domestic consumers, making them worse off. It may also lead to retaliatory tariffs by other countries, reducing overall trade and making everyone worse off. Therefore, while a tariff may benefit domestic producers in the short run, it is not an optimal policy for the overall economy.

A Tariff