If country A is importing good x from country B where x is produced along a perfectly inelastic supply curve, then country B will suffer the entire deadweight loss from any tariff imposed on imports to country A.

Question

Quizplus · Accepted Answer

If country A imposes a tariff on imports of good x from country B, the demand for good x in country A may decrease, leading to a reduction in the quantity imported. As a result, country B may shift their production to other goods or markets, and hence the deadweight loss may be shared by both countries.

If Country a Is Importing Good X from Country B