A High Tariff on Imported Good X Might Reduce Domestic

question 140

Multiple Choice

A high tariff on imported good X might reduce domestic employment in industry Y if

• A) X is an input used domestically in producing Y.
• B) X and Y are substitute goods.
• C) X is an inferior good.
• D) Y is an inferior good.

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Definitions:

Penetration Pricing

A strategy where a new product is introduced to the market at a low initial price to attract customers quickly and gain market share.

Skimming Pricing

A pricing strategy where a product is initially set at a high price before being gradually lowered to attract different segments of consumers.

Price-insensitive Customers

Consumers who are less affected by price changes and more focused on other factors such as quality, brand loyalty, or unique features.

Prestige Pricing

A pricing strategy where prices are set higher than average to suggest status, exclusivity, and high quality.