Which of the Following Chains of Events Occurs When a Tariff

question 17

Multiple Choice

Which of the following chains of events occurs when a tariff is imposed on a good?

• A) Domestic prices fall, decreasing the domestic quantity supplied and increasing the quantity demanded.
• B) Domestic prices rise, shifting the demand curve leftward and the domestic supply curve rightward.
• C) Domestic prices rise, shifting the domestic supply curve rightward.
• D) Domestic prices rise, decreasing the quantity demanded and increasing the domestic quantity supplied.
• E) Domestic prices fall, shifting the demand curve rightward, and consumers buy more of the good.

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Definitions:

Federal Law

Legislation passed by the national government of the United States that applies throughout the country.

Creative Destruction

The hypothesis that the creation of new products and production methods destroys the market power of existing monopolies.

Dominant Firms

Companies that have a major share of sales in a specific market, significantly influencing that market's dynamics.

New Firms

Newly established businesses entering the market, often bringing innovation or increasing competition in their industry segment.