Can a tariff ______ increase a country overall welfare?
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Answer: C. can sometimes
Explanation
Optimal tariffs can enhance national welfare by shifting trade terms favorably. Large countries possess sufficient market power to reduce foreign export prices. Tariff revenue collected by the government can offset internal deadweight losses. Tariffs create wedges between domestic and international prices for traded commodities. Terms of trade gains occur when foreign producers absorb part of the tax. Standard trade models demonstrate this theoretical possibility under restrictive assumptions.
International trade agreements generally seek to discourage unilateral tariff implementations. Trade wars often erupt when nations attempt to capture terms of trade gains. Economists emphasize that optimal tariff conditions rarely persist in practice. Stating tariffs will always increase welfare ignores negative impacts on domestic consumers. Claiming tariffs will never help overlooks the recognized optimal tariff theorem. None of the above is incorrect because one valid option exists.
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