A government is considering placing tariffs, taxes, on imported goods. Write a cost-benefit analysis for the situation—with at least one benefit and one cost.(1 point)

Question

Domestic businesses would sell their goods better since the imported goods would cost more; however, consumers would be required to pay more for the goods.

International trade would be unaffected since the number of goods imported would be the same; the price would just be different. As a result, this would not lead to domestic job creation.

Domestic businesses would sell their goods better since the imported goods would cost more, and more domestic jobs would be created to meet the higher demand for domestic goods.

Consumers would be required to pay more for the goods, and there would be less trade with foreign countries since their goods would not sell as well.

choose one

Answer 1

The most comprehensive option for the cost-benefit analysis is the following:

Costs: Consumers would be required to pay more for the goods, leading to a reduction in consumer welfare and purchasing power. As tariffs increase the prices of imported goods, consumers would either have to pay higher prices for both imported and domestic products or forego certain purchases altogether, potentially reducing overall consumption.

Benefits: Domestic businesses would sell their goods better since the imported goods would cost more. This increase in demand for domestic products may stimulate the economy and lead to job creation in these sectors as companies expand to meet higher domestic demand.

This analysis highlights that while there are potential benefits for domestic industries and job markets, the increased costs to consumers and potential negative consequences for trade relationships should also be carefully considered before implementing tariffs.