Final answer:
A tax on goods entering a country is known as a tariff. Reducing tariffs, such as on imported flat screen TVs, tends to decrease prices and increase the quantity sold in the market.
Step-by-step explanation:
A tax on goods entering a country is called a tariff. Tariffs are used by nations to generate revenue and protect domestic industries by making imported goods more expensive compared to locally produced items. This protective measure can discourage trade by increasing the cost for consumers and may lead to a trade barrier.
When a government modifies tariffs, such as cutting the tariff on imported flat screen televisions, it affects the equilibrium price and quantity in the market. Using a four-step analysis, a reduction in tariffs is likely to lead to a decrease in the price of imported flat screen TVs and an increase in the quantity sold, as the lower price makes these products more attractive to consumers and can stimulate demand.