When the Government Increases Tariffs

question 21

Multiple Choice

When the government increases tariffs:

• A) production switches from low-cost foreign producers to high-cost domestic producers, causing resources to be wasted.
• B) domestic consumers buy more goods, increasing the gains from trade.
• C) domestic producers produce more output, increasing the gains from trade.
• D) deadweight losses are eliminated because foreign producers sell their product below cost.

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