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

Question

Quizplus · Accepted Answer

When a large country imposes a tariff on a product, the price of that product in the domestic market will increase due to reduced competition from imports, leading to a higher autarkic price than the world price. At the same time, the global price of that product will be lowered by the tariff because the country will reduce its imports, reducing demand and causing a surplus in the world market.

If a Tariff Is Imposed by a Country That Is