According to the optimum tariff theory, a foreign producer will most likely ________.
A)ship highly taxed goods internationally on a per-unit basis
B)lower its export prices if the importing country imposes an import tax on its products
C)assess a tax on goods shipped internationally based on a percentage of the goods' value
D)seek import tariffs by using the comparable access argument

Question

Quizplus · Accepted Answer

According to the optimum tariff theory, a foreign producer will lower its export prices if the importing country imposes an import tax on its products. This is because the foreign producer wants to maintain its market share in the importing country and will reduce prices to remain competitive.

According to the Optimum Tariff Theory, a Foreign Producer Will