Question

Imposing of tariff, raises domestic prices causing fall in consumption of domestic goods is ______________.

 A) Protective effect

 B) Revenue effect

 C) Consumption effect

 D) Terms of trade effect​

Answer 1

Imposing of tariff, raises domestic prices causing fall in consumption of domestic goods is ______________.

=Consumption effect

Answer 2

Option C is the correct option.

Imposing of tariff, raises domestic prices causing fall in consumption of domestic goods is consumption effect.

Tariffs - excise duty on imported goods.

In consumption effect when domestic industry imposes tariff on their product the prices of that product in India will rise. This will lead to fall in the consumption of that good in India. This will also make the consumers put a part of their expenditure income on less wanted substitute products.