If a country imposes a $10 tariff on a foreign monopolist, the price set by the monopolist will:

Question

Quizplus · Accepted Answer

The imposition of a $10 tariff on a foreign monopolist will increase the cost of production for the monopolist, which will cause the monopolist to raise the price of their product. However, since the monopolist has a monopoly on the product, there is no competition to drive the price down. Therefore, the price will not fall by $10, but by a smaller amount, resulting in option B being the correct answer.

If a Country Imposes a $10 Tariff on a Foreign