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Suppose that the autarky price of commodity X is $10 in Nation A, $8 in Nation B and $6 in Nation C, and Nation A is too small to affect prices in Nation B or C by trading. If Nation A initially imposes a nondiscriminatory ad valorem tariff of 100 percent on its imports of commodity X from Nations B and C, will Nation A produce commodity X domestically or import it from Nation B or Nation C?

Microeconomics, Economics

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