Question

1) In an attempt to protect the lifestyle of domestic coffee workers, the government prohibits the importation of foreign coffee. Show the effect this has on the market for domestically grown coffee, using a graph.

2) D. In an attempt to protect the lifestyle of domestic coffee workers, the government prohibits the importation of foreign coffee. Show the effect this has on the domestic market for all coffee.

Answer 1

1) If I'm not mistaken, wouldn't this result in a increase in demand? Since people can't get imported coffee, they have to get the domestic coffee instead, right?

2) Wouldn't that result in a decrease in supply? Since it's talking about ALL coffee in total, the prohibiting of coffee from foreign lands would be decreasing the supply of total amounts of coffee?

Trying to make sure I'm understanding this stuff correctly

Answer 2

Yep sounds about right.

Answer 3

Thanks!