How Might an Export Tariff in a Large Country Improve

question 107

Multiple Choice

How might an export tariff in a large country improve the country's economic welfare?

• A) The export tariff will always improve the country's welfare, since there are no deadweight consumption and production losses.
• B) The export tariff will improve the country's welfare if terms of trade gains are larger than deadweight consumption and production losses.
• C) The export tariff will never improve the country's welfare, since deadweight consumption and production losses always outweigh terms of trade gains.
• D) The export tariff will improve the country's welfare if deadweight consumption and production losses are greater than terms of trade gains.

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Definitions:

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