A tariff that prohibits imports has only ?
Correct answer: C. consumption effect and protection effect
- A. a revenue effect and redistribution effect
- B. revenue effect and protection effect
- C. consumption effect and protection effect
- D. redistribution effect and consumption effect
Explanation
A prohibitive tariff eliminates imports, so the government collects no tariff revenue. The remaining effects are the protection effect for domestic producers and the consumption effect from reduced consumption at the higher domestic price.
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