Question

Tariffs and/or quotas tend to impose ______ on domestic consumers, and ______ to the producers of the protected goods in the importing economy.

A. gains; costs
B. gains; gains
C. costs; costs
D. costs; gains

Answer 1

Tariffs and/or quotas impose costs on domestic consumers and gains to the producers in the importing economy.

Step-by-step explanation:

Tariffs and/or quotas tend to impose costs on domestic consumers, and gains to the producers of the protected goods in the importing economy.

When a country places limitations on imports through tariffs or quotas, it raises the price of the protected goods in the domestic market. As a result, domestic consumers have to pay higher prices and buy smaller quantities. On the other hand, domestic producers benefit from these trade barriers as they can sell their goods at higher prices and sell larger quantities.