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Alternative solution to trade negotiations

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Reference no: EM131860305

The "theory of the second best" states that

Select the correct response:

  • there is always an alternative solution to trade negotiations if the first best is not feasible.
  • free trade is the second best way to address a market failure.
  • free trade is only the "second best" policy after the optimal tariff.
  • government intervention in a market can improve welfare when market failures are present.

Import quotas are less desirable than tariffs when the goal is to restrict trade

Reference no: EM131860305

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