📚 Learning Guide
Effects of Tariffs on Markets
easy

If a tariff on imported shoes is like a fence around a garden, then what is the effect of that fence on the plants inside the garden?

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Choose the Best Answer

A

The plants grow larger due to less competition from outside

B

The plants die because they can't receive sunlight

C

The plants are replaced by weeds from outside

D

The plants become more expensive to maintain

Understanding the Answer

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Answer

A tariff on imported shoes acts like a fence around a garden by protecting the local shoe industry from outside competition. This means that the local producers can sell their shoes without worrying about cheaper imports. However, just like a fence can limit the space for plants to grow, the tariff can also lead to higher prices for shoes inside the country. For example, if a local shoe company knows that it doesn't have to compete with cheaper foreign shoes, it might raise its prices. While the tariff helps local businesses, it can also hurt consumers who have to pay more for shoes.

Detailed Explanation

The fence keeps out outside plants, which means the plants inside can grow bigger. Other options are incorrect because This answer suggests that the plants can't get sunlight; This option implies that outside weeds will take over.

Key Concepts

Effects of Tariffs
Demand Shift towards Domestic Goods
Market Equilibrium
Topic

Effects of Tariffs on Markets

Difficulty

easy level question

Cognitive Level

understand

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