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    Question

    Political parties, when faced with perfect competition,

    what type of tariff will they impose?
    A Prohibitive tariff Correct Answer Incorrect Answer
    B Optimum tariff Correct Answer Incorrect Answer
    C Zero tariff Correct Answer Incorrect Answer
    D Revenue-maximizing tariff Correct Answer Incorrect Answer

    Solution

    When political parties are faced with perfect competition, they will impose a zero tariff. In a perfectly competitive global market, any tariff would make domestic goods uncompetitive and would not be beneficial for the economy.

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