Suppose that the U.S. government imposes a 20% tariff to protect U.S. clothing manufacturers adversely affected by the expiration of the Multifibre Arrangement. Compared with a free-trade situation, what will happen to the price of clothing in the United States and to U.S. production of clothing?

Question

Quizplus · Accepted Answer

Imposing a tariff on imported clothing makes these goods more expensive, which increases the price of clothing in the domestic market. As a result, domestic producers face less competition from imports, encouraging an increase in U.S. clothing production.

Suppose That the U