What is meant by the optimum tariff

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Reference no: EM133125066

1. What is meant by the optimum tariff? What is its relationship to changes in a nation's terms of trade and volume of trade?

2. Why are other nations likely to retaliate when a nation imposes an optimum or any tariff? What is likely to be the final outcome resulting from the process of retaliation?

3. Why does world welfare decline if one nation imposes an optimum tariff and the other nation does not retaliate with a tariff of its own?

4. (a) What is the difference between a nominal tariff and an effective tariff? How is the rate of effective protection measured?

(b) What is the usefulness of the concept of effective protection?

5. (a) What is the tariff structure of industrial nations?

(b) Why is this of special concern to developing nations?

6. Suppose that a nation reduces import tariffs on raw materials and intermediate products but not on finished products. What effect will this have on the rate of effective production in the nation?

Reference no: EM133125066

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