Question

A country is a leading producer of lumber. They want to increase their production of lumber. They decide to impose a tariff on the importation of lumber. What is the likely result of this decision on exports, domestic consumers, and producers?(1 point)

a tariff will decrease exports of lumber, lower prices for domestic consumers, and raise prices for foreign consumers

a tariff will increase imports of lumber and lower prices for domestic consumers and producers

a tariff will increase exports of lumber and lower domestic prices for consumers and producers

a tariff will decrease imports and raise prices for domestic consumers and producers

Answer 1

Answer: the fourth option.

A tariff makes imports more expensive so imports fall. Domestic price rises, which benefits domestic producers (higher price and output) but harms domestic consumers (pay more and buy less).