Suppose the Ivory Coast,a small country,imports wheat at the world price of $4 per bushel.If the Ivory Coast imposes a tariff of $1 per bushel on imported wheat,the price of wheat in Ivory Coast will increase,but by less than $1,all else equal.

Question

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When a tariff is imposed, the domestic price of the imported good typically increases by the full amount of the tariff, assuming the country is a price taker in the world market. Therefore, the price of wheat in the Ivory Coast would increase by $1 per bushel.

Suppose the Ivory Coast,a Small Country,imports Wheat at the World