A negative result of high tariffs is that they can sometimes lead to which of the following?

• A. increased consumer surplus
• B. greater international competition
• C. deadweight loss due to reduced market efficiency
• D. lower prices for domestic consumers

Answer: (C)

Verified step by step guidance

1. Understand the concept of tariffs: A tariff is a tax imposed on imported goods, which generally raises the price of those goods in the domestic market.
2. Analyze the effect of tariffs on consumer surplus: Since tariffs increase the price of imported goods, domestic consumers usually face higher prices, which tends to decrease consumer surplus rather than increase it.
3. Consider the impact on international competition: Tariffs protect domestic producers by making imported goods more expensive, which typically reduces international competition rather than increasing it.
4. Identify the concept of deadweight loss: Deadweight loss occurs when market efficiency is reduced due to distortions like tariffs, leading to lost gains from trade and a reduction in total welfare.
5. Conclude that high tariffs can cause deadweight loss due to reduced market efficiency, which is a negative outcome, while lower prices for domestic consumers are unlikely because tariffs raise prices.