Economics · International Economics & Tariffs

An 'Optimal Tariff' is defined as that rate of tariff which:

Verified Solution4 OptionsUpdated: October 2026👁️1 View

1minimizes a 'small' importer's welfare when foreign export supply elasticity is high
2maximizes a 'small' importer's welfare when foreign export supply elasticity is low
3maximizes a 'large' country's national welfare where the foreign export supply elasticity is less than infinitely elastic✓
4minimizes a 'large' importer's welfare when foreign export supply elasticity is high

Correct answer

maximizes a 'large' country's national welfare where the foreign export supply elasticity is less than infinitely elastic

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