Is it possible that an outright ban on foreign imports will have no effect on th

Question

Is it possible that an outright ban on foreign imports will have no effect on the equilibrium price? (Hint: Suppose that imports occur only at relatively high prices.) An import ban O A. would have no effect if the world price were less than the equilibrium price O B. would have no effect if domestic supply were zero at the equilibrium price. C. would have an effect if the world price were equal to the domestic price O D. would have an effect if imports were positive at the equilibrium price. O E. would have an effect if domestic demand were positive at the equilibrium price.

Explanation / Answer

Ans is D

An import ban will have an effect if imports were positive at the equilibrium price because it menas at equilibrium price, domestic demand=domestic supply + imports but if domestic imports gets banned then total supply will fall short compared to domestic demand and thus price will rise

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