If an import-competing firm is imperfectly competitive,then under free trade an export tariff will ________ domestic market price,________ producer surplus,________ consumer surplus,________ government revenue,and ________ overall domestic national welfare.
A) increase; have no effect on; decrease; increase; decrease
B) decrease; decrease; increase; decrease; have no effect on
C) increase; have no effect on; increase; decrease; increase
D) decrease; increase; decrease; increase; decrease
E) have no effect on; have no effect on; decrease; increase; decrease

Question

Quizplus · Accepted Answer

An export tariff will increase the domestic market price as it restricts exports, leading to more supply in the domestic market. This has no effect on producer surplus as the firm is imperfectly competitive and can adjust prices. Consumer surplus decreases due to higher prices. Government revenue increases from the tariff, but overall domestic national welfare decreases due to inefficiencies and loss in consumer surplus.

If an Import-Competing Firm Is Imperfectly Competitive,then Under Free Trade