Consider a small country with the domestic demand and domestic supply for pens given as Initially the small country engages in free trade at the international price of 2 units, but now the government imposes an import tariff of 1 unit, then government import tariff revenue would be
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Consider a small country with the domestic demand and domestic supply for pens given as Q_D = 10 - P Q_S = -2 + P Initially the small country engages in free trade at the international price of 2 units, but now the government imposes an import tariff of 1 unit, then government import tariff revenue would be (A) 14 (B) 9 (C) 7 (D) 6
Trade policy: tariffs, quotas and protection has come up 63 times in 6 exams since 2010.
This question is on Tariffs: welfare effects, optimum tariff and incidence, part of Trade policy: tariffs, quotas and protection in International Economics.
What a tariff does to prices, output, revenue and welfare in small and large countries.
TestStop has 24 past-paper questions on this subtopic.
Question from the JNU SIS 2021 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.