A country is more likely to have net welfare gains when it imposes a tariff on a foreign monopolist if:

Question

Quizplus · Accepted Answer

A small tariff on a foreign monopolist can increase domestic production and reduce imports, which can lead to net welfare gains for the country. A large tariff can lead to retaliation from the foreign country, decreasing overall welfare. The size of the tariff revenues and deadweight losses may not necessarily determine the net welfare gains for the country.

A Country Is More Likely to Have Net Welfare Gains