Tariffs (1 Viewer)

[swagmeister]

Just another MC to wrap off the night...

Got the right answer but with a tariff, won't some still be supplied domestically? Like before the tariff domestic supply is 0E an after the tariff domestic supply is 0F? That's how I always though it worked at least...

 

[obliviousninja]

D

 

[mreditor16]

Just another MC to wrap off the night...

Got the right answer but with a tariff, won't some still be supplied domestically? Like before the tariff domestic supply is 0E an after the tariff domestic supply is 0F? That's how I always though it worked at least...

So, before the tariff is imposed, domestic producers supply quantity OE, but domestic consumers demand OH. So the shortfall (i.e. excess demand) is satisfied by importers, who come along and supply EH to the market. On the other hand, after the tariff is imposed, domestic producers supply OF while domestic consumers now demand OG. Therefore, the shortfall (i.e. excess demand) is again satisfied by importers, who come along and now supply FG.

Anyway, from what I can see, all the answers provided for that multiple choice are wrong. In my opinion, the answer should be OBKG, because in my opinion, domestic expenditure is all expenditure, regardless of its purchased from domestic producers or from importers.

However, I would run this question by your teacher, and ask them what they think.

 

[swagmeister]

So, before the tariff is imposed, domestic producers supply quantity OE, but domestic consumers demand OH. So the shortfall (i.e. excess demand) is satisfied by importers, who come along and supply EH to the market. On the other hand, after the tariff is imposed, domestic producers supply OF while domestic consumers now demand OG. Therefore, the shortfall (i.e. excess demand) is again satisfied by importers, who come along and now supply FG.

Anyway, from what I can see, all the answers provided for that multiple choice are wrong. In my opinion, the answer should be OBKG, because in my opinion, domestic expenditure is all expenditure, regardless of its purchased from domestic producers or from importers.

However, I would run this question by your teacher, and ask them what they think.

My thoughts exactly, the answer they provided is the 'most correct' though