Final answer:
When a country imposes a tariff, domestic producers and the government gain through increased market share and tariff revenue, respectively. However, domestic consumers face higher prices, which can result in a net economic loss for the country due to decreased economic efficiency. The correct option is C.
Step-by-step explanation:
If a country imposes a tariff on an imported good, several groups within the country may gain or lose in different ways. Domestic producers gain because the tariff provides them with protection against foreign competition, which allows them to maintain or increase their market share. The government also gains through the collection of tariff revenue.
In the mentioned example, if a tariff of $10 is imposed on each garment imported and 15 million garments are imported, the government would collect $150 million. However, while these two groups may see benefits, domestic consumers face higher prices for goods, which is a disadvantage. This can be particularly impactful as illustrated by the 12% rise in washing machine prices after the 2018 U.S. tariffs.
Economic analysis often shows that the benefits accrued to both domestic producers and the government are typically less than the costs imposed on consumers through higher prices, resulting in a net economic loss for the country. Moreover, protectionism could lead to a decline in economic efficiency and loss of potential economic gains from comparative advantage and economies of scale.