When the home country is small, how will a tariff protecting a home monopolist affect the home country's demand curve?

Question

Quizplus · Accepted Answer

When the home country is small, imposing a tariff to protect a home monopolist will lead to an upward parallel shift in the perfectly elastic demand curve. This is because the home country, being small, is a price taker in the world market. The tariff increases the price of imported goods, making the monopolist's goods relatively more attractive without changing the quantity demanded at each price, hence the parallel shift.

When the Home Country Is Small, How Will a Tariff