Ask Question
23 February, 16:33

Which statement is false? A A large country never gains from imposing an export subsidy. B A small country never gains from imposing an export subsidy. C A large country never gains from imposing an import tariff. D A small country never gains from imposing an import tariff.

+2
Answers (1)
  1. 23 February, 17:16
    0
    A large country never gains from imposing an import tariff - option C.

    Explanation:

    For an import tariff, the national welfare effect is assessed as the sum of the producer and consumer surplus and government revenue effects.

    There may be a rise or fall in national welfare, when a large country implements an import tariff.

    A large country never gains from imposing an import tariff. The reason is that:

    Whenever a large country implements a large tariff, it will result into a fall in national welfare but whenever a large country implements a small tariff, it will raise national welfare.

    When the national welfare decreases, the implication is that the sum of the gains is lower than the sum of the losses across all individuals in the economy.

    Thus, a large country never gains from imposing an import tariff - option C.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Which statement is false? A A large country never gains from imposing an export subsidy. B A small country never gains from imposing an ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers