When a tariff is imposed, there is always an additional loss. One loss occurs when production moves from more efficient foreign producers to less efficient domestic producers. This loss is the:
A) consumption loss.
B) efficiency transfer.
C) production loss.
D) X-factor.

Question

Quizplus · Accepted Answer

The production loss occurs because the tariff causes domestic producers to produce more, while foreign producers produce less due to the higher cost of exporting to the tariff-imposing country. This results in a less-efficient use of resources and a loss of potential gains from trade that would have occurred with free trade. Answers A and B are not accurate descriptions of this particular loss, and there is no such thing as the "X-factor" in this context.

When a Tariff Is Imposed, There Is Always an Additional