The Impact of Tariffs on Pillow Prices in Turkey

How does a tariff affect the price and quantity of imported pillows in Turkey?

a. $50 and the quantity of pillows purchased will decrease b. $57 and the quantity of pillows purchased will decrease c. $50 and the quantity of pillows purchased will increase d. $57 and the quantity of pillows purchased will increase

Answer:

Due to the $7 tariff, the price of the pillows in Turkey will increase to $57, leading to a decrease in the quantity of pillows purchased (option b).

The subject of this question is Economics, more specifically, it is about the concept of trade. In this scenario, Turkey is an importer of goose-down pillows with a market price of $50. Turkey imposes a $7 tariff on pillows, which it pays as a price-taker in the pillow market. Thus, a tariff is an additional price that the country pays on the imported goods. As a result of the tariff, the pillow's price in Turkey will increase by the amount of the tariff.

Therefore, the answer to the question 'as a result of the tariff Turkey's price of pillows will be' is option (b). Post-tariff, the price of the pillows in the country will be $57 ($50 original price + $7 tariff), and due to the increase in price, the number of pillows purchased will decrease.

← Types of monopoly pure monopoly Advantages of water transportation over road transportation →