The following figure shows the domestic demand and supply curves for a good. With free trade, the price of the good in the domestic market is P 3 . The government introduces a 5% tariff in the market which raises the domestic price to P 2 .
Figure 7-1

-Refer to Figure 7-1. With the imposition of the tariff, the level of imports to the domestic market is:

Question

The following figure shows the domestic demand and supply curves for a good. With free trade, the price of the good in the domestic market is P 3 . The government introduces a 5% tariff in the market which raises the domestic price to P 2 .
Figure 7-1
 
-Refer to Figure 7-1. With the imposition of the tariff, the level of imports to the domestic market is:

Quizplus · Accepted Answer

The imposition of a tariff typically reduces the level of imports. In this context, BD represents the reduced quantity of imports after the tariff is applied.

The Following Figure Shows the Domestic Demand and Supply Curves