📚 Learning Guide
Effects of Tariffs on Markets
hard

When a tariff is imposed on imported goods, it primarily leads to an increase in the __________ of domestic products as consumers shift their preferences due to higher prices of imports.

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Learning Path
Learning Path

Question & Answer
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3
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Choose the Best Answer

A

supply

B

demand

C

equilibrium

D

surplus

Understanding the Answer

Let's break down why this is correct

Answer

When a tariff is imposed on imported goods, it usually causes the price of those goods to rise because the tariff is an extra tax that importers must pay. As a result, consumers may decide to buy more domestic products that are now relatively cheaper. This shift in consumer preference leads to an increase in the demand for domestic products. For example, if a tariff raises the price of imported shoes, people might start buying more shoes made in their own country instead. Overall, tariffs can help local businesses by making their products more appealing compared to more expensive imports.

Detailed Explanation

When tariffs raise the price of imported goods, people tend to buy more local products. Other options are incorrect because Some might think supply increases, but that's not right; Equilibrium refers to the balance between supply and demand.

Key Concepts

Effects of Tariffs
Market Demand and Supply
Equilibrium Price
Topic

Effects of Tariffs on Markets

Difficulty

hard level question

Cognitive Level

understand

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