👤
Answered

Spain is an importer of computer chips, taking the world price of $11 per chip as given. Suppose Spain imposes a $3 tariff on chips. Which of the following outcomes is possible? a. Total surplus in the Spanish chip market increases. b. More foreign-produced chips are sold in Spain. c. Spanish consumers and producers of chips gain. d. The price of chips in Spain increases to $14; the quantity of Spanish-produced chips increases; and the quantity of chips imported by Spain decreases.

Answer :

A possible result of imposing a tariff on the import of chips is the price of chips in Spain increases to $14; the quantity of Spanish-produced chips increases; and the quantity of chips imported by Spain decreases.

What is the impact of the tariff on chips?

When a tariff is placed on the import of certain goods and services, it has the following impacts:

  • It increases the price of the item. The rate of increase in the price of the item depends on the elasticity of demand for the good.

  • It reduces the quantity imported due to the increased price of importation as a result of the tariff.

  • It encourages local production of the item.

To learn more about imports, please check: https://brainly.com/question/26497713

Go Teaching: Other Questions