Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Tariffs increase economic welfare by lowering prices for consumers.
B
Tariffs harm domestic producers by making foreign goods cheaper.
C
Tariffs protect domestic producers but can lead to a decrease in overall economic welfare.
D
Tariffs have no significant impact on economic welfare or domestic producers.
Understanding the Answer
Let's break down why this is correct
Answer
Tariffs are taxes that a government puts on imported goods, and they can significantly affect economic welfare and domestic producers. When a tariff is applied, the price of imported goods usually goes up, making them more expensive for consumers. This can lead to consumers buying fewer imports and instead purchasing more domestic products, which helps local businesses. However, while domestic producers might benefit in the short term from reduced competition, higher prices can hurt consumers who have to pay more for goods. For example, if a country imposes a tariff on imported cars, people might buy more local cars, but they will also face higher prices, reducing their overall economic welfare.
Detailed Explanation
Tariffs help local businesses by making foreign goods more expensive. Other options are incorrect because This answer suggests that tariffs lower prices, but they actually raise prices for consumers; This option says tariffs harm local producers by making foreign goods cheaper, but tariffs do the opposite.
Key Concepts
economic welfare
domestic producers
Topic
Effects of Tariffs on Trade
Difficulty
medium level question
Cognitive Level
understand
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