A large country can gain from imposing a tariff on the import of a good if:
A)the tariff drives the quantity imported to zero.
B)the tariff is high enough that the country becomes an exporter of the product.
C)the part of the tariff paid by the foreign exporters is greater than the losses arising from the production and consumption effects of the tariff in the domestic market
D)the tariff revenue collected by the domestic government is less than the losses caused by the production and consumption effects of the tariff.

Question

Quizplus · Accepted Answer

A tariff may lead to domestic producers producing more due to protection against foreign competition, leading to increased domestic employment and output. However, it may also lead to higher prices for consumers, leading to decreased consumption and potential inefficiencies. If the tariff revenue collected from foreign exporters is greater than the losses arising from these production and consumption effects, then the country could benefit from imposing the tariff.

A Large Country Can Gain from Imposing a Tariff on the Import