Which of the following situations will arise in the domestic market following the imposition of an import ban?

Question 13 options:

imports increase, domestic production increases, prices increase

imports increase, domestic production decreases, prices decrease

imports decrease, domestic production increases, prices increase

imports decrease, domestic production increases, prices decrease

I say C

C is the best answer.

Thanks

To determine the correct answer, let's break down each situation and see which one aligns with the imposition of an import ban.

Option A: imports increase, domestic production increases, prices increase
This situation is unlikely to occur following an import ban. When imports are banned, it means that foreign products are no longer allowed to enter the domestic market. Consequently, imports should decrease rather than increase. Therefore, option A is not correct.

Option B: imports increase, domestic production decreases, prices decrease
Similar to option A, this situation is contradictory to the nature of an import ban. An import ban is implemented to restrict or eliminate foreign products, which should lead to a decrease in imports, not an increase. Therefore, option B is not correct.

Option C: imports decrease, domestic production increases, prices increase
This scenario is congruent with the imposition of an import ban. When foreign products are banned, imports decrease since they are no longer allowed in the domestic market. Additionally, to meet the demand previously fulfilled by imports, domestic production would need to increase. Moreover, the reduced competition from imports may result in higher prices for domestic products as consumers have fewer alternatives available. Therefore, option C appears to be the correct answer.

Option D: imports decrease, domestic production increases, prices decrease
This situation contradicts the typical outcome of an import ban. While imports are expected to decrease, domestic production increasing is aligned with the goal of reducing dependence on foreign products. However, prices are more likely to increase because the reduced competition can lead to higher prices in the absence of alternative options. Therefore, option D is not correct.

Based on this analysis, it seems that option C, "imports decrease, domestic production increases, prices increase," is the most accurate description of the likely outcome following the imposition of an import ban in a domestic market.