The imposition of a tariff causes consumption to _____ and imports to _________?
Correct answer: C. fall, fall
- A. rise, rise
- B. fall, rise
- C. fall, fall
- D. rise, fall
Explanation
A tariff raises the domestic price of imported goods, so consumers buy less and domestic production expands. The resulting fall in consumption and rise in domestic output reduce imports.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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