The Figure Below Shows the Demand (D) and Supply (S)

The figure below shows the demand (D) and supply (S) curves of a good produced domestically in an economy as well as traded in the international market.
Figure 20.1
In the figure,
P₁: Price of the good in the international market.
P₂: Price of the good in the domestic market after the imposition of tariff by the government.
P₃: No-trade price of the good in the domestic market.
-Refer to Figure 20.1. If the government imposes a tariff such that the price of the good in the domestic market is P₂ when the international price is P₁:

A) the import of the good by the domestic country increases by Q₅ - Q₄ units.
B) the import of the good by the domestic country declines.
C) the quantity of the good exported by the domestic country declines.
D) the domestic country is in equilibrium.
E) the quantity of the good exported by the domestic country increases.

Correct Answer:

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