Comparing a tariff levied on an import where the home firm is a monopoly to a situation where the home firms are competitive, we find:
a. the exact same result—both firms charge world price + tariff and both firms produce Q where MC = MR = world price + tariff.
b. that the monopoly firm will be able to charge a higher price and limit its quantity.
c. that the competitive firm will not be able to survive the impact of the tariff.
d. that quantity is not the issue; the monopoly firm will pay its workers less and earn higher profits.
Ans: a. the exact same result—both firms charge world price + tariff and both firms produce Q where MC = MR = world price + tariff.
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