How might an export tariff in a large country improve the
Country's economic welfare?
A)The export tariff will always improve the country's welfare, since there are no deadweight consumption and
Production losses.
B)The export tariff will improve the country's welfare if terms of trade gains are larger than deadweight
Consumption and production losses.
C)The export tariff will never improve the country's welfare, since deadweight consumption and production
Losses always outweigh terms of trade gains.
D)The export tariff will improve the country's welfare if deadweight consumption and production losses are greater
Than terms of trade gains.

Question

Quizplus · Accepted Answer

An export tariff can improve a large country's economic welfare if the terms of trade gains from the tariff exceed the deadweight consumption and production losses. However, if the deadweight losses exceed the terms of trade gains, then the export tariff would not improve the country's welfare. Therefore, option B is the correct choice.

How Might an Export Tariff in a Large Country Improve