Question

In order to protect the U.S. steel industry, the United States has levied a tariff on imports of foreign steel from many nations. Which of the following effects would an import tariff on steel be likely to have? (Check all that apply.)

	Quantity of steel imported would go down
	Prices paid by U.S. steel buyers would go up
	Prices received by U.S. steel producers would go down
	U.S. government revenue would go down
	Income to foreign exporters of steel to the USA would go down

To protect U.S. tart cherry producers against low-priced foreign competition, the United States is considering a tariff. Which of the following effects would an import tariff on tart cherries be likely to have? (Check all that apply.)

	Income to foreign producers of tart cherry would go down
	Prices received by domestic producers would go up
	Prices paid by consumers would go up
	Government revenue would be unchanged
	Quantity imported would go up

Answer 1

1. A tariff increases the price of imported goods. Domestic price after tariff is free trade plus tariff. A higher price in the domestic market decreases the demand for imported goods. Thus the quantity of import decreases.

The buyers of steel have to pay a high price after the imposition of tariff.

The decrease in import quantity on the import of steel decreases the income of foreign exporters.

Answer: The quantity of steel imported would go down.

Prices paid by U.S steel buyers would go up.

Income to foreign exporters of steel to the USA would go down.

2. After the tariff the export of tart terry decreases in foreign countries due to low import demand in U.S. This will increase the domestic supply and decrease the domestic price. Thus the foreign producers receive low price which will reduce their income.

The decrease in the import quantity of tart cherry increase the domestic price. Thus the domestic producers of tart Cherry in U.S.A will receive a high price.

The consumers in U.S have to pay a high price due to tariff.

Answer: Income to foreign producers of tart cherry would go down.

Prices received by domestic producers would go up.

Prices paid by consumers would go up.