An optimal tariff is one which reduces imports to the level at which ____ equals ____?
Correct answer: D. social marginal cost, social marginal benefit
- A. imports, exports
- B. the balance of trade, zero
- C. The demand for currency the supply of currency
- D. social marginal cost, social marginal benefit
Explanation
An optimal tariff balances the gain from improved terms of trade against the domestic efficiency loss caused by the tariff. This occurs where the relevant social marginal benefit equals social marginal cost.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? [email protected]
About Microeconomics
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.
Practise Microeconomics
1,742 free Microeconomics MCQs from Economics, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Discussion
Stuck on an option, or know a faster way to get there? Ask or explain it here.
No comments yet. Be the first to explain this one.
Exams that ask Economics questions like this
Economics is on 3 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Microeconomics questions
Import substitution is the replacement of ____ by domestic production _____ protection of ________?
A main advantage of specialization results from ?
If a nation has an open economy it means that the nation ?
The imposition of a tariff causes consumption to _____ and imports to _________?
The main cause of different relative costs between countries are ?
International specialization takes place because of______________?