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

Answer:

If the foreign offer curve is completely elastic (OF1), it must be identical to the free trade terms of trade line. 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).

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