Suppose that a foreign monopolist supplies the entire domestic market (there is no domestic production) . The home country then applies a 5% tariff on imports from the foreign monopolist. How will the tariff affect the price in the home market?
A) It will increase by more than 5%.
B) It will increase by 5%.
C) It will increase by less than 5%.
D) It will not change.
Correct Answer:
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