Compare the Effects on World Prices for an Export Tariff

question 9

Multiple Choice

Compare the effects on world prices for an export tariff in a small country with an export tariff in a large country.

• A) An export tariff in a small country and an export tariff in a large country both increase the world price by the amount of the tariff.
• B) An export tariff in a small country does not change the world price, while an export tariff in a large country increases the world price.
• C) An export tariff in a small country increases the world price, while an export tariff in a large country has no effect on the world price.
• D) Neither an export tariff in a small country nor an export tariff in a large country has any effect on the world price.

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Definitions:

Units

Units refer to the basic measure or quantity of a product, service, or the fundamental quantity used in measurement.

Labor

The effort by humans directed towards producing goods and services; in economics, it's considered one of the primary factors of production alongside land and capital.

Output

The amount of goods or services produced by a company, industry, or country within a specific period.

Cost

The monetary value spent to produce or obtain goods and services, including manufacturing, material, labor, and overhead costs.