Question

When a tariff is imposed, there is always an additional loss. One loss occurs when production moves from more efficient foreign producers to less efficient domestic producers. This loss is the:

Answer 1

Answer: The optimum tariff.

Explanation:

The optimum tariff maximizes the liquid benefit resulted by the improve of the nation’s terms of trade, althought the volume reduction of trades.  

In one side, the terms of trade of the country who imposes the tariff improve. On the other side, those of the trade partner decrease.  

It should be noted that even that the terms of trade of the country that impose the tariff improved, those are smaller if compared to the losses of the trade partner