Suppose that the U.S. Congress passes legislation that imposes a one-time lump-sum tariff on the product that a foreign firm exports to the United States. a. What happens to the foreign firm’s marginal cost curve as a result of the lump-sum tariff? b. Will the lump-sum tariff cause the foreign firm to export more or less of the good? Explain carefully.
Suppose that the U.S. Congress passes legislation that imposes a one-time lump-sum tariff on the product that a foreign firm exports to the United States. a. What happens to the foreign firm’s marginal cost curve as a result of the lump-sum tariff? b. Will the lump-sum tariff cause the foreign firm to export more or less of the good? Explain carefully.
Chapter1: Making Economics Decisions
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Suppose that the U.S. Congress passes legislation that imposes a one-time lump-sum tariff on the product that a foreign firm exports to the United States. a. What happens to the foreign firm’s marginal cost curve as a result of the lump-sum tariff? b. Will the lump-sum tariff cause the foreign firm to export more or less of the good? Explain carefully.
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