Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
They increase consumer surplus by lowering prices.
B
They decrease consumer surplus by raising prices.
C
They have no effect on consumer welfare.
D
They only affect producer surplus.
Understanding the Answer
Let's break down why this is correct
Answer
Tariffs are taxes imposed on imported goods, and they usually make those goods more expensive for consumers. When the government raises tariffs to protect domestic industries, it can lead to higher prices for products that people buy. For example, if a country places a tariff on imported cars, the prices of both imported and domestic cars may rise because consumers have fewer options and less competition. This means that consumers might end up paying more for cars or settling for lower-quality alternatives. Overall, while tariffs aim to support local businesses, they can hurt consumer welfare by reducing choices and increasing costs.
Detailed Explanation
Tariffs make imported goods more expensive. Other options are incorrect because Some might think tariffs lower prices, but they actually raise them; It's a common belief that tariffs don't change anything, but they do affect prices.
Key Concepts
Protectionism
Welfare Effects.
Topic
Effects of Tariffs on Markets
Difficulty
medium level question
Cognitive Level
understand
Ready to Master More Topics?
Join thousands of students using Seekh's interactive learning platform to excel in their studies with personalized practice and detailed explanations.