Since a tariff can increase employment in an industry, the result is a net increase in total surplus.

Question

​Since a tariff can increase employment in an industry, the result is a net increase in total surplus.

Quizplus · Accepted Answer

While a tariff can protect jobs in the industry it targets by making imported goods more expensive and thus less competitive, it generally leads to a net decrease in total surplus. This is because tariffs also lead to higher prices for consumers and can provoke retaliatory measures from other countries, potentially harming other sectors of the economy and reducing efficiency by not allowing the market to allocate resources to their most productive uses.

​Since a Tariff Can Increase Employment in an Industry, the Result

Since a Tariff Can Increase Employment in an Industry, the Result