In a small country, an export tariff will cause a(n) _______ in the domestic price of the export and _______ in the world price of the export.
A) increase; a decrease
B) decrease; a decrease
C) decrease; no change
D) increase; no change

Question

Quizplus · Accepted Answer

In a small country, an export tariff will decrease the domestic price of the export because it makes exporting less attractive, leading to more supply in the domestic market. The world price remains unchanged because the country is too small to influence global prices.

In a Small Country, an Export Tariff Will Cause A(n)