A large-country tariff necessarily increases the large country-s welfare.

Question

Quizplus · Accepted Answer

A large-country tariff can lead to higher prices and reduced trade, causing negative effects on consumers and firms that rely on imports. This can lead to a decrease in welfare for the large country. However, there may be specific cases where a tariff could increase welfare, such as in the presence of market distortions or retaliation from trading partners.

A Large-Country Tariff Necessarily Increases the Large Country-S Welfare