Why might a government impose tariffs to make imported goods more expensive?

• A. To increase the supply of imported goods
• B. To protect domestic industries from foreign competition
• C. To reduce government revenue
• D. To encourage consumers to buy more foreign products

Answer: (B)

Verified step by step guidance

1. Understand the purpose of a tariff: A tariff is a tax imposed by a government on imported goods, which increases the cost of those goods when they enter the domestic market.
2. Analyze the effect of tariffs on imported goods: By making imported goods more expensive, tariffs reduce the quantity demanded of these foreign products because consumers face higher prices.
3. Consider the impact on domestic industries: When imported goods become more expensive, domestic products become relatively cheaper, which can help protect domestic industries from foreign competition by encouraging consumers to buy locally produced goods.
4. Evaluate the options given: Increasing the supply of imported goods is unlikely because tariffs make imports more costly, not cheaper. Reducing government revenue is incorrect because tariffs generate revenue for the government. Encouraging consumers to buy more foreign products contradicts the effect of tariffs, which discourage foreign purchases.
5. Conclude that the main reason governments impose tariffs is to protect domestic industries from foreign competition by making imported goods more expensive and less attractive to consumers.