Compare the effects on world prices for an export tariff in
A small country with an export tariff in a large country.
A)An export tariff in a small country and an export tariff in a large country both increase the world price by the
Amount of the tariff.
B)An export tariff in a small country does not change the world price, while an export tariff in a large country
Increases the world price.
C)An export tariff in a small country increases the world price, while an export tariff in a large country has no effect
On the world price.
D)Neither an export tariff in a small country nor an export tariff in a large country has any effect on the world price.

Question

Quizplus · Accepted Answer

An export tariff in a small country does not have much impact on the world price as they have a small share in the global market. On the other hand, an export tariff in a large country can significantly affect the world price as they have a significant share in the global market, and any policy changes in their exports can impact the international prices. Hence, the correct choice is B.

Compare the Effects on World Prices for an Export Tariff