Suppose that the foreign country (say, France) has a monopoly in the airplane industry and the home country (say, China) is considering imposing a tariff on airplane imports from France. Use a demand-, supply-, and marginal-revenue-curve graph to show:   The effect of this tariff on the foreign monopolist’s profit; The effect of this tariff on the home country’s consumer surplus, government revenue, and total welfare. Is the home country unambiguously worse off as a result of the tariff? When would the country become better off?

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Perfect Competition

It is the structure of the market that is said to exist when with many buyers and sellers exchanging similar commodities and its price is fixed by the market forces, demand, and supply, and a single firm cannot cause an impact over the price or market value of the homogenous product. This structure of the market is called perfect competition.