Remembering the optimum tariff analysis of Chapter 15, explain why it might be possible that the imposition of a tariff by an LDC to improve its terms of trade (and thus hopefully to be in a better position at the start of any future deterioration) could reduce the LDC's welfare. Build the reverse case that reduction of an LDC tariff might improve the LDC's welfare at the present time, even though the terms of trade deteriorate because of the tariff reduction.

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The Answer of Remembering the optimum tariff analysis of Chapter 15, explain why it might be possible that the imposition of a tariff by an LDC to improve its terms of trade (and thus hopefully to be in a better position at the start of any future deterioration) could reduce the LDC's welfare. Build the reverse case that reduction of an LDC tariff might improve the LDC's welfare at the present time, even though the terms of trade deteriorate because of the tariff reduction.

Remembering the Optimum Tariff Analysis of Chapter 15, Explain Why