Suppose the United States eliminates its tariff on ball bearings used in producing exports. Ballbearing prices in the United States would be expected toA) increase, and the foreign demand for U.S. exports would increase.B) decrease, and the foreign demand for U.S. exports would increase.C) increase, and the foreign demand for U.S. exports would decrease.D) decrease, and the foreign demand for U.S. exports would decrease.E) decrease, and the foreign demand would be unchanged.
Question
Suppose the United States eliminates its tariff on ball bearings used in producing exports. Ballbearing prices in the United States would be expected toA) increase, and the foreign demand for U.S. exports would increase.B) decrease, and the foreign demand for U.S. exports would increase.C) increase, and the foreign demand for U.S. exports would decrease.D) decrease, and the foreign demand for U.S. exports would decrease.E) decrease, and the foreign demand would be unchanged.
Solution
If the United States eliminates its tariff on ball bearings used in producing exports, the expected outcome would be that ball bearing prices in the United States would decrease. This is because the elimination of the tariff would remove the additional cost associated with importing ball bearings, making them more affordable for domestic producers.
As a result of the decrease in ball bearing prices, the foreign demand for U.S. exports would be expected to increase. This is because the lower cost of production would make U.S. exports more competitive in the global market, attracting more buyers from abroad.
Therefore, the correct answer to the question is B) decrease, and the foreign demand for U.S. exports would increase.
Similar Questions
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n increase in the trade-weighted value of the U.S. dollar will most likely result in which outcome?A.U.S. workers will be able to work in other countries more easily.B.U.S. businesses will be forced to accept more foreign currency.C.U.S. consumers will be able to buy foreign goods at a lower cost.D.U.S. products sold in foreign markets will be in higher demand.
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