When foreign offer curve has an elasticity of one, the optimum tarrif will be
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Hence it cannot possibly advance to a higher trade indifference level. The less elastic the foreign offer curve, the higher will be the optimum tariff. Where the foreign offer curve has elasticity of one and thus is horizontal, the optimum tariff will be infinity.
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An optimum – or optimal – tariff can be defined as the level of tariff that optimizes a large country's welfare in terms of the volume and price of imported goods. Small countries with no real buying power have an optimal tariff of zero.
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