What should happen to the equilibrium price and quantity in a market as a result of a tariff on imports?
A)Equilibrium price and quantity should both go up.
B)Equilibrium price should go up,and equilibrium quantity should go down.
C)Equilibrium price should go down,and equilibrium quantity should go up.
D)Equilibrium price and quantity should both go down.

Question

Quizplus · Accepted Answer

When there is a tariff on imports, the cost of imported goods increases, causing a decrease in supply in the market. This shift in supply causes the equilibrium price to increase. However, the increase in price will also cause a decrease in demand, which will lead to a decrease in the equilibrium quantity. Hence, the answer is B.

What Should Happen to the Equilibrium Price and Quantity in a Market