If a country lowers tariffs on imports, which of the following is most likely to occur?

• A. The quantity of imported goods increases.
• B. The price of imported goods rises.
• C. Government revenue from tariffs increases.
• D. Domestic producers experience higher protection from foreign competition.

Answer: (A)

Verified step by step guidance

1. Step 1: Understand the role of tariffs. Tariffs are taxes imposed on imported goods, which increase the price of these goods in the domestic market.
2. Step 2: Analyze the effect of lowering tariffs. When tariffs decrease, the additional cost on imported goods is reduced, making these goods cheaper for consumers.
3. Step 3: Consider the impact on quantity demanded. Lower prices for imported goods typically lead to an increase in the quantity demanded of these goods, as consumers find them more affordable.
4. Step 4: Evaluate government revenue changes. Since tariffs are taxes, lowering them usually reduces the amount of revenue the government collects from imports, not increases it.
5. Step 5: Assess the effect on domestic producers. With cheaper imported goods, domestic producers face more competition, so they experience less protection, not higher protection, from foreign competition.