Describe how tariff could reduce imports.
A tariff is a tax imposed on imports or exports. Tax is an expense and hence increase the price of the goods and services. As price increases, demand decreases. Consequently, suppliers are discouraged from importing goods. However, it's important to note that the demand for goods will increase or decrease depending on the elasticity of demand. Imports with inelastic demand will not decrease even though a tariff is imposed, for example demand for cigarettes.
AH
Related Economics GCSE answers
All answers ▸What is price elasticity of demand?
Using real life examples, explain the differences between the different market structures.
8 What is likely to happen when the rate of interest increases? A) consumer spending increases B) firms buy fewer machines C) people hold more cash D) savers earn lower rewards
Explain why a government budget deficit is likely to stimulate economic growth.