Question

If a country imposes a tariff on imported shoes, we expect the domestic price of shoes to ……. And the quantity of shoes consumed in the domestic market to …….

a.) Fall; rise
b.) Fall; fall
c.) Rise; fall
d.) Rise; rise

Answer 1

The correct answer is letter "C": Rise; fall.

Step-by-step explanation:

Tariffs are levies imposed by the government in imported products with the objective of protecting domestic production and increase employment rates. However, this scenario causes that the country that was imposed the tariffs retaliates generating "trade wars".

Then, if imported shoes are imposed tariffs, the price of those shoes domestically will raise since the quantity demanded for them is likely to decrease -demand law.