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Maximum value of welfare gain to the country

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Reference no: EM132606928

Under what circumstances should the optimum tariff for the large open economy be zero? Suppose the equation of community indifference curve is xy = c (where x and y are amounts of two goods bought and c is a constant) and the free trade prices of the of the two goods are Rs.5 per unit and the GDP if the country if Rs.100. What is the maximum value of welfare gain to the country if both countries keep tariff zero?

Reference no: EM132606928

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