14. The small-country monopolist?s free-trade equilibrium features a marginal re

Question

14. The small-country monopolist?s free-trade equilibrium features a marginal revenue curve equal to__________ and coincident with _________ . A) marginal cost; the consumer?s demand curve for the product B) the world price; the new competitive demand curve for the firm C) one; profits D) imports at each price; the supply curve 15. In a large-country case, an optimal tariff would be: A) one that increases the producer surplus. B) one that raises the price of the product imported. C) one in which the terms-of-trade gain exceed the deadweight loss. D) one that easily passes the legislative process

Explanation / Answer

14. A. Marginal cost, the consumer’s demand curve for the product.

15. C. The welfare improvement occurs only if the terms of trade gain exceeds the total deadweight losses.

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