The U.S. government is considering implementing a tariff on processed vegetables imported from India. Assuming that the U.S. is an importer of processed vegetables, which of the following correctly explains the impact on the U.S. market?(1 point)

Question

Responses

The quantity of processed vegetables demanded will fall since the tariff will lower the domestic market price below the world price.
The quantity of processed vegetables demanded will fall since the tariff will lower the domestic market price below the world price.

The quantity of processed vegetables demanded will rise since the tariff will raise the domestic market price above the world price.
The quantity of processed vegetables demanded will rise since the tariff will raise the domestic market price above the world price.

The quantity of processed vegetables demanded will fall since the tariff will raise the domestic market price above the world price.
The quantity of processed vegetables demanded will fall since the tariff will raise the domestic market price above the world price.

The quantity of processed vegetables demanded will rise since the tariff will lower the domestic market price below the world price.
The quantity of processed vegetables demanded will rise since the tariff will lower the domestic market price below the world price.

Answer 1

The correct explanation of the impact on the U.S. market if a tariff is imposed on processed vegetables imported from India is:

The quantity of processed vegetables demanded will fall since the tariff will raise the domestic market price above the world price.

When a tariff is implemented, it increases the cost of imported goods, leading to an increase in the domestic market price of those goods (processed vegetables in this case). As the price rises, consumers will typically demand a lower quantity of the product, resulting in a decrease in the quantity demanded.