A tariff on a product
A)is a direct quantitative restriction on the amount of a good that can be imported.
B)increases the domestic quantity supplied.
C)increases domestic consumer surplus.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

A tariff on a product does not necessarily restrict the amount of a good that can be imported, but it does increase the cost of imported goods, making domestically produced goods more competitive. This results in an increase in the domestic quantity supplied. Tariffs also decrease domestic consumer surplus by increasing the price of imported goods. Therefore, choice B is the correct answer as it is the only option that is definitively true.

A Tariff on a Product