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The effect of imposing a tariff on a specific imported good is to ________ the domestic...

The effect of imposing a tariff on a specific imported good is to ________ the domestic price of the good and ________ the domestic production of the good. Select one: a. increase; increase b. decrease; increase c. decrease; decrease d. decrease; to leave unaffected.

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Answer #1

Answer: a. increase; increase

The effect of imposing a tariff on a specific imported good is to increase the domestic price of the good and increase the domestic production of the good.

When a tariff is imposed on a specific imported good, then the price of the good in domestic market increases by the amount of the tariff. The increase of imported price of the good decreases the amount of import and hence increases the domestic production of the good.

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