Question
When a nation imposes an import tariffs, the nation's offer curve will
The correct answer is
move closer to the axis measuring exports
Understanding Offer Curves and Tariffs
The offer curve graphically represents the quantities of goods a country is willing to export in exchange for specific quantities of imports, based on the terms of trade.
An import tariff is a tax levied on imported goods, increasing their domestic price.
Impact of Tariffs on the Offer Curve
When a nation imposes an import tariff, the relative price of imports increases for that nation. This change affects the trade-offs represented by the offer curve:
- To acquire the same quantity of imports, the country must now export a larger quantity of its goods.
- If the offer curve plots Exports on the vertical (Y) axis and Imports on the horizontal (X) axis, this implies that for a given quantity of Imports (X), the required quantity of Exports (Y) increases.
- This causes the offer curve to shift upwards, moving away from the horizontal axis (Imports) and towards the vertical axis (Exports).
Therefore, the offer curve shifts closer to the axis that measures the nation's exports.
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Important Questions from International Trade
- Which among the following countries was the largest trading partner of India in 2013-14 ?
- Which among the following will be classified as non-tariff barrier ?
I. Phyto-sanitary measures.
II. Import and export licensing.
III. Countervailing duty
IV. Environmental standards
Select the answer from the code given below.
Codes : - Who developed the use of trade indifference curves in the analysis of trade theory ?
- Among the following the percentage share of ____________ commodity group was highest in major imports of India during 2021-22.
- A tax imposed upon monopoly profits
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