If a small country were to levy a tariff on its imports then this would
A) decrease the country's economic welfare.
B) have no effect on that country's economic welfare.
C) increase the country's economic welfare.
D) change the terms of trade.
E) raise prices on its exports in other countries.

Question

Quizplus · Accepted Answer

Levying a tariff on imports would make the domestic goods more competitive and increase domestic production. However, this would increase the price of imported goods, which would negatively impact consumers and decrease their purchasing power. As a result, overall economic welfare in the country would decrease.

If a Small Country Were to Levy a Tariff on Its