Suppose an industry receives protection from the government in the form of tariffs. A number of years later, it is observed that the quantity supplied by domestic firms had decreased and that the domestic price was substantially greater than the world price. We could conclude that a. removal of the tariff would actually cause domestic output to increase and price to fall. b. the tariff had been imposed to counteract dumping and had been successful. c. removal of the tariff would cause domestic output to fall even further. d. the tariff had been imposed to protect an infant industry and that the industry still needed protection.

Suppose an industry receives protection from the government in the form of tariffs. A number of
years later, it is observed that the quantity supplied by domestic firms had decreased and that the domestic
price was substantially greater than the world price. We could conclude that
a. removal of the tariff would actually cause domestic output to increase and price to fall.
b. the tariff had been imposed to counteract dumping and had been successful.
c. removal of the tariff would cause domestic output to fall even further.
d. the tariff had been imposed to protect an infant industry and that the industry still needed protection.

 

answer:

Solution: a) removal of the tariff would actually cause domestic output to increase and price to fall

Explanation: Most tariffs on trade in the nations have to be eliminated to lay the strong foundation for economic growth in the country as in this case.

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