When a Large Nation Imposes a Tariff, Which of the Following

question 155

Multiple Choice

When a large nation imposes a tariff, which of the following is NOT a cost incurred?

• A) deadweight efficiency loss
• B) reduced consumer surplus
• C) deterioration of terms of trade for the trading partners
• D) falling government revenues for the nation imposing the tariff

---

Definitions:

Surplus Inventory

Inventory exceeding the current demand, leading to excess stock that may require special handling or discounting.

Salvaged

Items or materials recovered for use or sale after being damaged, rejected, or abandoned.

Quantity Flexibility Contract

An agreement between a buyer and a supplier that allows the buyer to adjust order quantities based on actual demand within certain limits.

Revenue-sharing Contract

A type of agreement where the profits generated by a business or project are distributed among the partners or investors based on a predetermined formula.