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QUESTION 20 As a result of tariffs, domestic producers tend to gain more than domestic consumers lose spend less money on lob
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Answer #1

A. Gain more than domestic consumer lose.

Explanation :

Under free trade domestic price equals to the world price. A tariff rises the price of imported goods above the world price by the amount of the tariff. So domestic supplier of the goods now can sell its product as World price plus tariff. Thus the price of good both imported and domestic rises by the amount of tariff.

Because of the tariff rises the price of domestic goods, domestic suppliers are better off than the domestic buyers. Also the government raises revenue.

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