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)

Question

Responses

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

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

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

Answer 1

The most likely result of imposing a tariff on the importation of lumber would be:

A tariff will decrease imports and raise prices for domestic consumers and producers.

This response makes sense because the purpose of a tariff is to make imported goods more expensive, which tends to reduce their importation. Consequently, domestic producers may benefit from reduced competition, allowing them to raise their prices. However, domestic consumers would likely face higher prices due to the reduced competition from imports.