When a large country imposes a tariff, the burden is often shared by:
A) foreign consumers and domestic producers.
B) domestic consumers and foreign producers.
C) all producers and consumers in each nation equally.
D) its government.

Question

Quizplus · Accepted Answer

When a large country imposes a tariff, it ultimately leads to an increase in the price of the import. This results in a decrease in the quantity demanded of the import, causing a reduction in the quantity supplied by foreign producers. Consequently, the burden falls on domestic consumers who face higher prices, while domestic producers benefit from the reduced competition and increased price. Therefore, the burden is shared by domestic consumers and foreign producers.

When a Large Country Imposes a Tariff, the Burden Is