Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Tariffs increase economic efficiency by promoting domestic production.
B
Tariffs decrease economic efficiency by raising prices and reducing consumer choice.
C
Tariffs have no effect on economic efficiency.
D
Tariffs increase economic efficiency by enhancing competition.
Understanding the Answer
Let's break down why this is correct
Answer
Tariffs are taxes that a government places on imported goods, and they can affect economic efficiency by raising the prices of those goods. When tariffs are applied, domestic producers may benefit because their products become relatively cheaper compared to the imported ones, which can lead to increased production and jobs in the local market. However, this can also lead to higher prices for consumers, as they have to pay more for imported goods or may have fewer choices available. For example, if a country imposes a tariff on foreign cars, people might have to pay more for cars overall, even if they prefer the imported ones. This situation can lead to a less efficient market because resources are not being used in the most productive way, and overall economic welfare can decrease.
Detailed Explanation
Tariffs make imported goods more expensive. Other options are incorrect because Some think tariffs help local businesses by making imports costly; It's a common belief that tariffs don't change anything.
Key Concepts
International Trade
Economic Efficiency
Topic
Effects of Tariffs on Markets
Difficulty
medium level question
Cognitive Level
understand
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