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Basic Question 12 of 17
The introduction of a tariff on widgets reduces ______.
B. widget exports but not widget imports
C. widget imports but not widget exports
A. both widget imports and widget exports
B. widget exports but not widget imports
C. widget imports but not widget exports
User Contributed Comments 7
| User | Comment |
|---|---|
| timspear | Which would cause local widget producers to sell them locally rather than export them? |
| haarlemmer | Higher domestical price, I think |
| rt2007 | tariff is only on imports - so it will not affect exports at all. |
| ehc0791 | The logic of timspear is reasonable. A is deeper thinking than C |
| bmeisner | Timspear's logic is only relevant in the short run and I believe the analysis is correct. This question doesn't state whether it refers to short run or long run effects. However for long run effects, to me A is still the best choice because if you consider the effect of the tariff on international prices it should lower prices because of decreased international quantity demanded. This means the country's exporters would lower their quantity supplied (exports). |
| Shaan23 | You guys are making this way to complicated. There is no long run or short run. How can there be exports when the demand locally is greater then the local supply? There is NO exports at all. |
| ibrahim18 | Agree with Shaan23. Nice thinking |
You have a wonderful website and definitely should take some credit for your members' outstanding grades.
Colin Sampaleanu
Learning Outcome Statements
compare types of trade restrictions, such as tariffs, quotas, and export subsidies, and their economic implications
CFA® 2024 Level I Curriculum, Volume 1, Module 6.