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Which of the following groups are adversely affected when an import tariff is imposed? Select two options.

A. Government
B. Domestic competitors
C. Foreign producers
D. Consumers

User Shanice
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1 Answer

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Final answer:

Option C and D are selected. Foreign producers and consumers are the two groups adversely affected when an import tariff is imposed, with foreign producers facing reduced sales and consumers facing higher prices.

Step-by-step explanation:

The groups adversely affected when an import tariff is imposed are foreign producers and consumers. Foreign producers are affected negatively because the tariff makes their products more expensive in the importing country, which may reduce their sales and profits. Consumers in the importing country face higher prices due to the tariff, both because of the added cost of the import and because domestic producers often raise prices when their foreign competitors' prices increase. While domestic competitors might benefit from reduced competition, they also may not experience the pressure to innovate or increase efficiency, which can eventually hinder their progress. The government might receive revenue from the tariff, but the overall economic benefit is often negated by the loss of economic gains from trade.

Consumers and Domestic competitors are adversely affected when an import tariff is imposed. Consumers are negatively impacted because tariffs increase the prices of imported goods, making them more expensive for consumers to purchase. This reduces their purchasing power and can lead to higher costs of living. Domestic competitors are also affected because tariffs create a barrier to entry for foreign competitors, protecting domestic industries from competition. This can lead to reduced competitiveness and innovation within the domestic market.

User Manicmethod
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