Australia is an importer of computer chips and is also a price taker in the chip market.The world price of these computer chips is $25.If Australia imposes a $5 tariff on chips,who will gain
A)Consumers and producers will both gain.
B)Consumers and producers will both lose.
C)Consumers will gain, and producers will lose.
D)Consumers will lose, and producers will gain.

Question

Quizplus · Accepted Answer

Consumers will lose because they will have to pay a higher price for the chips due to the tariff. Producers will gain because the tariff makes imported chips more expensive, potentially allowing domestic producers to sell more at a higher price.

Australia Is an Importer of Computer Chips and Is Also