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Comparing a Tariff Levied on an Import Where the Home

Question 55

Multiple Choice

Comparing a tariff levied on an import where the home firm is a
Monopoly to a situation where the home firms are competitive, we
Find:


A) the exact same result-both firms charge world price + tariff and both firms produce Q where MC = MR = world price + tariff.
B) that the monopoly firm will be able to charge a higher price and limit its quantity.
C) that the competitive firm will not be able to survive the impact of the tariff.
D) that quantity is not the issue; the monopoly firm will pay its workers less and earn higher profits.

Correct Answer:

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