Question

Explain the optimal tariff. How does it alter the basic theory of tariffs

Answer 1

Optimal tariff states that , a country which imports large quantities of goods and services can shift the burden of tariffs from the local consumers to the foreign suppliers. This can only happen, when the country is the primary buyer form many suppliers.

tariffs are taxes imposed on each quantity of goods that are imported. The main purpose of tariffs is tp protect domestic industries and raise revenue.

It alters the basic theory of tariffs :

Optimal tariffs shifts the burden of tariff to foreign suppliers and tariffs imposes taxes on imported goods which the local consumers have to pay.