The Metzler Paradox
A) could theoretically happen when a small country levies a tariff.
B) refers to a situation when an Optimal Tariff hurts a country's economic welfare.
C) refers to a situation when the imposition of a tariff lowers domestic prices.
D) refers to a situation when the imposition of a tariff helps foreign exporters.
E) refers to a situation when export growth in a country harms its economic welfare.

Question

Quizplus · Accepted Answer

The Metzler Paradox occurs when the imposition of a tariff leads to a decrease in domestic prices, contrary to the typical expectation that tariffs raise domestic prices.