Question

what role does elasticity of offer curve play in determining the optimum tariff of a country?​

Answer 1

Answer:

The less elastic the foreign country's offer curve, the more a given tariff change will improve the home country's terms of trade (assuming no retaliation).

Answer 2

The less elastic the foreign country's offer curve, the more a given tariff change will improve the home country's terms of trade.

• A country that has a completely elastic offer curve is one that is willing to exchange its exports for imports at a constant exchange rate regardless of how much it imports or exports.
• No matter what the home nation does to its tariffs, it cannot alter the terms of its commerce in this circumstance. The same conditions of sale apply at (s) as they did at (R).
• Since these small nations are economically insignificant in comparison to their trade partner, the rest of the world, the offer curve of the rest of the world facing Guatemala, Upper Volta, and so on are completely elastic.

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