Which of the following is true about an excise tariff?
A) Domestic firms' marginal cost curves are shifted up by the amount of the excise tariff.
B) Foreign firms' average cost curves are shifted down by the amount of the excise tariff.
C) Domestic firms' average cost curves are shifted up by the amount of the excise tariff.
D) Foreign firms' marginal cost curves are shifted up by the amount of the excise tariff.

Question

Quizplus · Accepted Answer

An excise tariff is a tax on imported goods, which increases the cost for foreign firms, effectively shifting their marginal cost curves up by the amount of the tariff.

Which of the Following Is True About an Excise Tariff