The diagram illustrates the consequences of a tariff being introduced on a good traded internationally. Sdom is the supply and D the demand in country R. Sw is the world supply curve for the product and Swt is the world supply curve following the introduction of a tariff by country R. Which combination describes how domestic supply of, and demand for, the good in country R changes after the tariff is introduced?
- Ademand falls; domestic supply falls
- Bdemand falls; domestic supply rises
- Cdemand rises; domestic supply falls
- Ddemand rises; domestic supply rises