Question

Sometimes countries impose trade restrictions. These restrictions limit competition from other countries. One type of trade restriction is a tariff, also called an import tax. Tariffs raise the price of imported goods, making domestic goods the lower-priced option. They also generate revenue for the government. Quotas are another type of trade restriction. A quota is a limitation on the quantity of a product that may be imported. Quotas reduce the supply of imported goods, indirectly raising their prices. Again, the domestic product becomes the lower-priced alternative. Tariffs and quotas are used to encourage people to buy domestic products instead of foreign ones.

How do tariffs and quotas encourage people to buy domestic products?

A
by generating revenue for the government

B
by making imported products more expensive

C
by raising the prices of domestic goods and services

D
by destroying foreign products before people can buy them

Answer 1

B by making imported products more expensive

Tariffs and quotas increase the cost or limit the availability of imported goods, which makes those imported products more expensive compared to domestic products. As a result, consumers are encouraged to purchase domestic products instead.