Question
10. The government reduced the tariffs on imported luxury cars to the United States. How does this affect the supply of luxury cars in the United States? Increase Decrease Factor that shifts the supply line:
Answer
4
(270 Votes)
Rhoswen
Elite · Tutor for 8 years
Answer
Increase
Explanation
The question refers to the effects of tariffs on the supply of goods, more specifically, luxury cars in the United States. A tariff is a duty or tax imposed on imported goods. By reducing tariffs, the costs for importers decrease and they can supply more for the same price. Therefore, this should lead to an increase in availability - or supply - of luxury cars from outside the domestic market. The final part asks what factor is causing this change in the supply - known as a shift in the supply curve in economics. The reduction of tariffs could be identified as a change in production costs.