If a tariff is imposed by a country that is large enough to have market power in global markets,the domestic consumer will face a domestic price ________ than the world price for the product,and this world price will be ________ by the tariff.

Question

Quizplus · Accepted Answer

If a country with market power imposes a tariff, it can reduce the quantity of imports and drive up the domestic price. Hence, the domestic consumer will face a higher domestic price than the world price for the product. The tariff will reduce the world price because it reduces the quantity of imports from the world market.

If a Tariff Is Imposed by a Country That Is