The Effect of a Tariff on a Foreign Monopolist Is

question 121

Multiple Choice

The effect of a tariff on a foreign monopolist is similar to a large nation imposing a tariff on a small nation. What is the implication for the welfare of the home nation?

• A) Only very large tariffs bring any benefit to the home nation.
• B) No tariffs are the best policy; all tariffs have a deadweight net loss.
• C) Small tariffs can be beneficial, but only to a certain point.
• D) The foreign producer may actually raise prices to make the tariff impossible to impose.

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Definitions:

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