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Consider two hypothetical countries, Borzia and Ardon. Both countries produce iGadgets, and the price of iGadgets is higher in Borzia than in Ardon. If Borzia and Ardon open to trade, producers in would be more likely to lobby their government for an import tariff on iGadgets in order to protect themselves from foreign competition.
Which of the following statements about the effects of the tariff compared to free trade are correct? Select all that apply.
a. The tariff always raises the price of imported iGadgets above their domestic price.
b. In Borzia, some workers at retail and shipping companies that import iGadgets will lose their jobs.
c. The tariff need not increase the price of the imported iGadget above its domestic price.
d. In Ardon, consumption decreases and domestic production increases.
e. In Borzia, consumption decreases and domestic production increases.
Answers: 3
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