For a large nation, the levying of an import tariff on steel
A) necessarily causes the nation's welfare to decline.
B) causes the price of steel on the world market to decline.
C) causes the price of steel for domestic consumers to rise by the full amount of the tariff.
D) necessarily causes the nation's welfare to increase.

Question

Quizplus · Accepted Answer

For a large nation, an import tariff can affect world prices because the nation has significant market power. The tariff reduces the quantity of steel imported, which can lead to a decrease in the world price of steel.

For a Large Nation, the Levying of an Import Tariff