Tariff effects: An overview
Consider two hypothetical countries, Alagir and Ertil. Both countries produce iGadgets, and the price of iGadgets is lower in Alagir than in Ertil. If Alagir and Ertil open to trade, producers in would be more likely to lobby their government for an import tariff on iGadgets in order to protect themselves from foreign competition.
Which of the following statements about the effects of the tariff compared to free trade are correct?
A. In Alagir, workers in iGadget importing companies lose their jobs.
B. In Ertil, some workers at retail and shipping companies that import iGadgets lose their jobs.
C. In Ertil, consumers pay more for the domestic iGadgets.
D. In Ertil, workers in iGadget importing companies see more jobs available to them.
E. In Ertil, producers of iGadgets are willing to expand output.