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

imports decrease, domestic production increases, prices increase

imports increase, domestic production increases, prices increase

imports increase, domestic production decreases, prices decrease

imports decrease, domestic production increases, prices decrease

I say the last :imports decrease, domestic production increases, prices decrease

why would prices decrease, if it originally could be produced in another country cheaper?

It would increase so it is B

It would increase so it is c ssorry

Oh my it is B

If a tariff came, why would imports increase? That makes the price higher... Are you guessing?

I'm not confused it with another , so it is an increase for the consumer

To determine the correct answer, let's break down the components of a tariff and how they affect the domestic market.

A tariff is a tax imposed by a government on imported goods. Its purpose is to protect domestic producers from foreign competition and generate revenue for the government.

Now let's analyze the given options:

1. Imports decrease, domestic production increases, prices increase: When a tariff is imposed, it makes imported goods more expensive, which decreases their demand. As a result, domestic producers can benefit from reduced competition and increase their production. However, higher demand for domestic goods can also lead to an increase in prices.

2. Imports increase, domestic production increases, prices increase: This scenario is less likely when a tariff is imposed. The purpose of a tariff is to discourage imports, so it is unlikely to result in an increase in imports. However, if there are other factors at play, such as increased demand or changes in supply chains, it is conceivable that both imports and domestic production could increase. In this case, prices might increase due to higher demand and possibly increased production costs.

3. Imports increase, domestic production decreases, prices decrease: This scenario contradicts the purpose of a tariff. When a tariff is imposed, it is typically meant to protect domestic industries and reduce imports. Increased imports and decreased domestic production would not align with that objective. Additionally, the decrease in domestic production would likely lead to a decrease in supply, potentially resulting in higher prices rather than lower prices.

4. Imports decrease, domestic production increases, prices decrease: This scenario aligns with the intended purpose of a tariff. By making imported goods more expensive, demand for imports decreases, creating an opportunity for domestic producers to increase their production. This increase in domestic production can lead to a greater supply, which may result in lower prices.

Based on the analysis, the correct answer is option 4: "imports decrease, domestic production increases, prices decrease."