The graph above shows domestic supply and demand with trade in a SMALL country. With trade, this country can purchase at the world price, Pw. Suppose that this country imposes a $5 per unit tariff on this good. Which of the following is true?
A) The domestic price will rise by $5.
B) Consumers will be better off.
C) There will not be deadweight losses due to this tariff, since it is a small country.
D) Producers will not increase domestic production.
A
Economics
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