Anushka posted an Question
April 26, 2021 • 20:36 pm 30 points
  • UGC NET
  • Economics

Unable to figure it out.

2 Answer(s) Answer Now
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  • Reshma gupta Best Answer

    there is a formula for optimum tariff T0= 1/e-1. hence 1/ 1-1= 1/0= infinite. so the answer should be 2.

  • Aabha mishra 1 best-answer

    The less elastic the foreign offer curve, the optimum tariff will be higher.It is the relationship between the foreign offer curve and optimum tariff. In the above question it is given that foreign offer curve has unitary elastic it means it will be horizontal and according to the relation between both foreign offer curve and optimum tariff... the optimum tariff will be infinite in this case. hence the answer will be option 2

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