Which of the Following Situations Will Arise in the Domestic

question 36

Multiple Choice

Which of the following situations will arise in the domestic market following the imposition of a tariff?

• A) imports increase, domestic production increases, prices increase
• B) imports increase, domestic production decreases, prices decrease
• C) imports decrease, domestic production increases, prices increase
• D) imports decrease, domestic production increases, prices decrease

---

Definitions:

Fixed Costs

Costs that do not vary with the level of output or business activity, such as rent, salaries, and loan payments.

Short Run

A period in economics during which at least one input is fixed, limiting the immediate capacity to adjust production levels.

Monopolistic Competitive

A market structure characterized by many firms selling products that are similar but not identical, allowing for significant differentiation and some degree of market power.

Long Run

A period of time in which all factors of production and costs are variable, allowing companies to adjust all aspects of their operations.