Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
The tariff raises the price of imported goods, reducing consumer purchasing power.
B
The tariff increases domestic production, leading to an overabundance of goods.
C
The tariff eliminates all imports, thereby increasing competition.
D
The tariff encourages consumers to switch to inferior goods, increasing overall satisfaction.
Understanding the Answer
Let's break down why this is correct
Answer
When a country imposes a tariff on imported goods, it raises the price of those goods for consumers. This means that people have to pay more to buy the same items they used to get for less money. As a result, some consumers might decide not to buy these goods at all or to buy fewer of them, which leads to a decrease in consumer surplus. Consumer surplus is the benefit that consumers get when they pay less than what they are willing to pay. For example, if a shirt costs $20 without a tariff but $30 with a tariff, consumers who valued the shirt at $25 will no longer buy it, losing out on that extra $5 benefit.
Detailed Explanation
A tariff makes imported goods more expensive. Other options are incorrect because Some might think that more domestic production means more choices; It's a common belief that stopping imports boosts competition.
Key Concepts
Effects of Tariffs
Consumer Surplus
Domestic Production
Topic
Effects of Tariffs on Trade
Difficulty
hard level question
Cognitive Level
understand
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