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- Subject
- Tariffseconomics-mcqs › tariffs
- Published
- 28 May 2019
- Last updated
- 28 May 2026
When a country that meets the criteria of the large nation model levies an import tariff, what happens to the domestic price of the imported good?
Multiple choice question for Tariffs. Select an option, then review the explanation below.
Explanation
In the large nation model, imposing an import tariff causes the domestic price to increase, but by less than the tariff itself. This occurs because the country’s market power allows it to influence world prices, leading to a partial pass-through of the tariff to domestic consumers.
More Tariffs MCQs
Practice related questions from the same subject.
- 1.Under a free trade system, what is the total worth of imports?
- 2.What do empirical studies generally indicate about the nature of U.S. import tariffs?
- 3.Which of the following statements about government trade policies is NOT typically true?
- 4.If the nominal tariff on finished computers is 12% and the weighted average nominal tariff on the inputs for making computers is 18%, what can be said about the effective rate of protection for the computer sector?
- 5.If Pakistan applies a tariff on ballpoint pens consisting of 25 rupees per pen plus 12% of the pen's price, what type of tariff is this an example of?