1. Given below are two groups' (consumers, c, and a special interest group, i) true demands concerning a tariff on snack foods. Demand against (consumers): wtp($) = 80 + 2t Demand for (special interest): wtp($) = 50 - t Where t is the tariff rate. a. Graph the demand curves and explain how much tariff there will be if there were no free riding and all preferences were fully revealed. b. Now assume that "free riding" plagues the consumer group so that their revealed willingness to pay is given by: wtp($) = 30 + t. What are some causes of the "free riding"? Why is this not likely to happen to the producer group? c. Now what will be the equilibrium tariff rate? Graph this scenario in the same graph. d. Relate the outcome to a partial equilibrium tariff graph.

1. Given below are two groups' (consumers, c, and a special interest group, i) true demands concerning a tariff on snack foods. Demand against (consumers): wtp($) = 80 + 2t Demand for (special interest): wtp($) = 50 - t Where t is the tariff rate. a. Graph the demand curves and explain how much tariff there will be if there were no free riding and all preferences were fully revealed. b. Now assume that "free riding" plagues the consumer group so that their revealed willingness to pay is given by: wtp($) = 30 + t. What are some causes of the "free riding"? Why is this not likely to happen to the producer group? c. Now what will be the equilibrium tariff rate? Graph this scenario in the same graph. d. Relate the outcome to a partial equilibrium tariff graph.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

The analysis of a quota implies that .... please select one or more : a) The effect of a quota on trade is the same as a tariff. b) A quota will cause the same deadweight losses as a tariff. c) States should prefer quota instead of tariff. d) A quota increases imports if it is associated with high price elasticity of demand. e) When a quota is applied, the consumer surplus decreases but the producer surplus does not increase because only the state benefits from the quota.
3. Two large countries are "players" in a game in which they each choose the tariff that maximizes welfare within their own country given what tariff the other country is charging. a. The tariff charged by each country is a decreasing function of the tariff the other country is charging. Why? b. Is the same thing true for a small country? That is, will a small country's optimal tariff depend upon the tariffs other countries charge? Why or why not? Asked this question once before and the answer was complete nonsense so please try to answer the questions.
Price per Saddle Domeslic Supply A B. P2 World Price Tariff P1 G Domestic Demand Q1 Q2 Q3 Q4 Quantity of Saddles Before the tariff is implemented, what is the size of consumer surplus? O A OA + B OA+B+ C + D + E + F OG+C
e1
1. In Town A there is only one newspaper, Daily Outrage. The demand for the paper depends on the price and the amount of scandal reported. The demand function is Q = 15SP-3 where Q is the number of issues sold per day, S is the number of column inches of scandal reported in the paper, and P is the price. Scandals are not a scarce commodity in town A, but it takes resources to write, edit, and print stories of scandal. The cost of reporting S units of scandal is £10S and is independent of the number of papers sold. In addition, the cost to print and deliver the paper is £0.10 per copy and is independent of the amount of scandal reported in the paper. (a) Calculate the price elasticity of demand. Explain whether the price elasticity depends on the amount of scandal reported and whether the price elasticity is constant over all prices. Comment on the price sensitivity of the readers of the Daily Outrage. (b) Calculate the profit maximising price using the formula that writes marginal…
Economics Question
Question #3. Question #1 is attached for reference.
The demand curve for wine in Italy is given by D = 20 2P. Its supply curve is given by S = 2P – 4. Italy is a small country. The price of wine in the world market is $3. Suppose that the Italian government's objective is to protect the domestic wine industry. It imposes a specific tariff of $2 on wine imports. The optimal tariff (i.e., the tariff that maximizes Italy's welfare) on wine for Italy is: 0 1 2 3 none of these
urgntly please
Below is a hypothetical example of an estimated industry supply curve for automobiles.Qs = 4000P – 50,000PL - 3,700PT – 400,000PK - 1000T Where:P : Average Price of an AutomobilePL: Average Price of Labor per Hour (the wage rate)PT: Average Price of TrucksPK: Price of Capital – Interest Rate – iT: Tariff on Imported Cars Assume:PL = $30 per hour PT = $15,000PK = 10%T = $1,000 PL = $30 per hour Slope parameter associated with the average price oflabor is -50,000PT = $15,000 Slope parameter associated with the average price oftrucks is -3,700PK = 10% Slope parameter associated with the price of capital (theinterest rate) is -1,000 (in your equation express theprice of capital as 10)T = $1,000 Slope parameter associated with the tariff is – 1,000 a. Derive the supply curve for automobiles as a function of price holding all other things constant. b. Graph the supply curve in linear form as a function of price only indicating the quantity supplied at a price of -0- or the vertical…
17. Suppose the domestic demand and supply for T-shirt are as follows: Demand: P = 100-Q Supply: P = 4 +3Q Assume that the world price is R50. Suppose the government introduces a tariff of R5. Calculate the deadweight loss in the economy as a result of the tariff. (Round off to the second decimal place.)
The market for rice in an East Asian country has demand and supply given by QD = 28 – 4P and QS = -12 + 6P, where quantities denote millions of bushels per day. a. If the domestic market is perfectly competitive, find the equilibrium price and quantity of rice. Compute the triangular areas of consumer surplus and producer surplus. b. Now suppose that there are no trade barriers and the world price of rice is $3. Confirm that the country will import rice. Find QD, QS, and the level of imports, QD – QS. Show that the country is better off than in part (a), by again computing consumer surplus and producer surplus. c. The government authority believes strongly in