If a small country imposes a tariff on imported motorcycles, the world price of motorcycles will...
If a small country imposes a tariff on imported motorcycles, the world price of motorcycles will __________ and the domestic price of motorcycles will __________.
Fall; rise
Stay constant; fall
Correct!
Stay constant; rise
Rise; rise
Homework Answers
The world price of the motorcycle will remain the same and the domestic prices of motorcycle will rise. As the uncompetitive local firms who were not able to compete at the world price will produce that will cause some deadweight loss and higher price.
The answer is "C".
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If a small country imposes a tariff on imported motorcycles, the
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