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Principles of Microeconomics

7th Edition
N. Gregory Mankiw
ISBN: 9781305156050

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BuyFindarrow_forward

Principles of Microeconomics

7th Edition
N. Gregory Mankiw
ISBN: 9781305156050
Textbook Problem

If a nation that imports a good imposes a tariff, it will increase

a. the domestic quantity demanded.

b. the domestic quantity supplied.

c. the quantity imported from abroad.

d. all of the above.

To determine
The impact of tariff on the imports.

Explanation

The international trade is the exchange of goods and services between different nations in the world. The exchange will take place and the main two processes are the export and imports. The exports is the sale of domestic goods to the foreigners and imports is the vice versa.

Option (b):

When the domestic price of the commodity is lower than the price in the foreign countries, then the domestic country will import from the foreign countries and it will lead to lower domestic price and lower domestic supply of goods and services but when the tariff is imposed on the commodity that is being imported, it will increase the domestic price of the commodity and as a result, the quantity supplied in the economy will increase. So, option 'b' is correct.

Option (a):

When the domestic price of the commodity is lower than the price in the foreign countries, then the domestic country will import from the foreign countries and it will lead to lower the domestic price and lower domestic supply of goods and services but when the tariff is imposed on the commodity that is being imported, it will increase the domestic price of the commodity...

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