Which of the Following Situations Will Arise in the Domestic

question 40

Multiple Choice

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

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

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Definitions:

Cost Advantage

The benefit or upper hand a business gains when it can provide a product or service at a lower price than its competitors, often through efficiencies, economies of scale, or lower input costs.

Fixed Cost

A business expense that remains constant regardless of the level of production or business activity, such as rent or salaries.

Variable Cost

Costs that change in proportion to the level of activity or volume of goods produced.

Volume of Business

The total amount of trade or transactions conducted by a company over a specified period, often measured in sales or units sold.