Essay
A) Is a country a small or large country if it faces a perfectly price elastic
foreign export supply curve?
B) What is the optimal tariff for a country facing a perfectly price elastic
foreign export supply curve?
C) If the foreign export supply is less than the perfectly price elastic
foreign export supply curve, will the optimal tariff increase or decrease as
the price elasticity of demand increases?
D) What happens to the country's welfare if it applies a tariff higher than
the optimal tariff?
Correct Answer:
Verified
A) a small country
B) zero
C) ...
B) zero
C) ...
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