A country opens to trade, but imposes a tariff on imports. If the world price of...
A country opens to trade, but imposes a tariff on imports. If the world price of a good is greater than the domestic price, the result will be:
Group of answer choices:
the government collects tariff revenue.
the government collects no tariff revenue.
foreign producers benefit.
none of the above.
Homework Answers
Ans) When world price is greater than domestic price, country will export the goods and hence tariff becomes irrelevant in this case because no one will import the good.
An export will benefit the domestic producers as producer surplus increases.
Option c (government collects no tariff revenue).
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