Question

If the world price for oil is below the equilibrium price for the U.S. oil market and the U.S. government imposes a tariff on imported​ oil, U.S. domestic production of oil would​ ________ and domestic consumption of oil would​ ________ as a result of the tariff.

[fill in increase or decrease in the blanks]

Answer 1

According to the definition of the tariff - it is the tax imposed by the government to restrict the import of items from the other country that result in an increase in the price of foreign goods so high that people favour to buy it domestically from the home market,

so according to the question when the US government put a tariff on imported items then US domestic production of oil will increase and this results in a decrease of consumption of the domestic oil due to mass production and supply