Which type of goods becomes more expensive as a result of tariffs?

• A. Domestically produced goods
• B. Inferior goods
• C. Public goods
• D. Imported goods

Answer: (D)

Verified step by step guidance

1. Understand what a tariff is: A tariff is a tax imposed by a government on goods imported from other countries.
2. Recognize the effect of tariffs on prices: When a tariff is applied, the cost of imported goods increases because importers must pay the tax, which is usually passed on to consumers.
3. Analyze the impact on domestically produced goods: Since imported goods become more expensive, domestically produced goods may become relatively cheaper or more competitive, but their prices do not directly increase due to tariffs.
4. Clarify the definitions of other goods: Inferior goods are defined by consumer income effects, not tariffs; public goods are non-excludable and non-rivalrous and are not directly affected by tariffs.
5. Conclude that tariffs specifically make imported goods more expensive, as the tax is levied on these goods when they enter the domestic market.