Tariffs affect international trade in a similar way that increasing production costs affect a company's pricing strategy. Just as higher production costs might lead a company to increase prices, resulting in reduced demand, tariffs lead to higher prices for imported goods, which in turn affects domestic consumption. In this analogy, what would be the outcome of a tariff on imported goods? A: Increased domestic consumption, B: Decreased domestic consumption, C: No change in domestic consumption, D: Increased imports from non-tariff countries

When a government imposes tariffs on imported goods, it makes those goods more expensive for consumers. This is similar to how a company might raise prices if its production costs go up, leading to fewer people wanting to buy its products. As the prices of imported goods rise due to tariffs, people are likely to buy less of those goods, resulting in decreased domestic consumption. For example, if a tariff is placed on imported cars, consumers might choose to buy fewer foreign cars or switch to domestic brands, which could be cheaper. Therefore, the correct outcome of a tariff on imported goods is decreased domestic consumption.