A tariff ______ increase a country overall welfare?
Correct answer: C. can sometimes
- A. will always
- B. will never
- C. can sometimes
- D. None of the above
Explanation
A tariff can sometimes raise national welfare in a large country if its improvement in terms of trade exceeds the efficiency losses caused by the tariff. It does not always do so, and a small country cannot influence world prices.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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