Question

Which of the following would be expected if the tariff on foreign-produced shoes were decreased? The domestic price of shoes would fall. The supply of foreign shoes to the domestic market would decline, causing shoe prices to rise. The demand for foreign-produced shoes would decrease, causing the price of shoes to increase in other nations. The number of unemployed workers in the domestic shoe industry would decline.

Answer 1

Answer:

The domestic price of shoes would fall.

Explanation:

Lowering the import tariff of a country will result in incentivizing the foreign producers to increase importing into that country. This is because the importer now needs to pay less in taxes than before.

In order to stay competitive with pricing, domestic producers need to adjust the price accordingly. In this example, it means they need to lower their price to battle with foreign competition.