Question

In case when there is positive externality in the production of some good, the tariff on...

In case when there is positive externality in the production of some good, the tariff on this good

a) is an example of dumping

b) can be welfare improving

c) will hurt domestic producers

d) will certainly decrease welfare

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Answer #1

d) will certainly decrease welfare

(When there is positive externality, subsidy should be given to increase welfare because there is underproduction. If tariff is imposed then it would reduce production further and will certainly decrease welfare.)

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