Question

Which of the following explains why tariffs and quotas raise the cost of protected products, such as sugar, to consumers?

-High demand forces domestic businesses to lower prices to match foreign competitors' prices
-High demand causes the government to raise revenues to protect domestic farmers
-High demand encourages world prices to increase at regular intervals
-High demand encourages domestic quantities to increase, raising domestic prices higher than world prices​

Answer 1

Answer: High demand encourages domestic quantities to increase, raising domestic prices higher than world prices​

Step-by-step explanation:

Due to tariffs and quotas, the amount of the protected goods coming into the country from countries where it is cheaper will reduce.

This will push people towards the domestic manufacturers of the goods. This increase in demand for local goods will lead to the producers having to charge more as well as produce more. As they are charging more based on the situation in their own country, the prices will be more than world prices.