The ______________ is the tariff that maximizes the positive difference between gains associated with improvement in terms of trade and the losses resulting from reduction in the volume of trade.
A)optimum tariff
B)prohibitive tariff
C)nominal tariff
D)absolute tariff

Question

Quizplus · Accepted Answer

The given definition describes the concept of optimum tariff, which is the tariff rate that balances the positive effects of improved terms of trade with the negative effects of reduced trade volume. Therefore, option A) is the best choice. Option B) is incorrect because a prohibitive tariff aims to completely restrict imports, while the definition provided does not suggest such extreme measures. Option C) and D) are not relevant to the given definition.

The ______________ Is the Tariff That Maximizes the Positive Difference