📚 Learning Guide
Effects of Tariffs on Markets
easy

How do tariffs on imported goods generally affect domestic markets?

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Choose the Best Answer

A

They raise the price of imported goods, increasing demand for domestic alternatives.

B

They lower the price of domestic goods by increasing competition.

C

They have no effect on the demand for domestic products.

D

They decrease the overall market equilibrium quantity.

Understanding the Answer

Let's break down why this is correct

Answer

Tariffs are taxes that a government places on imported goods, making them more expensive. When tariffs are applied, the price of imported products goes up, which can lead customers to buy more local products instead, helping domestic businesses. For example, if a country imposes a tariff on imported steel, builders might choose to buy steel made in their own country because it costs less than the imported steel after the tariff. While this can help local industries grow, it can also lead to higher prices for consumers, since domestic products might not be as cheap or as readily available. Overall, tariffs can protect local jobs but may also limit choices and increase costs for consumers.

Detailed Explanation

Tariffs make imported goods more expensive. Other options are incorrect because This idea suggests that tariffs help local businesses by making prices lower; Some might think tariffs don't change how much people want local products.

Key Concepts

Tariffs
Domestic Market Effects
International Trade
Topic

Effects of Tariffs on Markets

Difficulty

easy level question

Cognitive Level

understand

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