How Does a Tariff on an Imported Good Affect Domestic

question 45

Multiple Choice

How does a tariff on an imported good affect domestic producers?  

• A) Domestic producers are better off because they sell more goods at the same price. 
• B) Domestic producers are better off because they sell more goods at a higher price. 
• C) Domestic producers are better off because they sell the same quantity of goods at a higher price. 
• D) Domestic producers are neither better off nor worse off because imports do NOT change domestic production.

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Definitions:

Bad Debts Expense

An expense account to record accounts receivable that a company does not expect to collect.

Allowance for Doubtful Accounts

A contra-asset account designed to predict the value of receivables that are expected to be uncollectible.

Direct Method

A cash flow statement preparation approach that lists major cash receipts and payments during the period.

Bad Debts Recovered

Previously written off debts that have unexpectedly been collected.