Consider the effects of an import tariff in a small coutnry using the graphbelow.DomesticSupplyPw +tPDomesticDemand40 4575 95 105Which area on the graph corresponds to consumption loss? What isdomestic consumption with free trade?O WO Y

Domestic Demand: Domestic demand for a commodity can be defined as the desire and willingness of a…

Consider the effects of an import tariff in a small coutnry using the graph below. Domestic Supply Pw +t Domestic Demand 40 45 75 95 105 Which area on the graph corresponds to consumption loss? What is domestic consumption with free trade? O w O Y

Consider the effects of an import tariff in a small coutnry using the graph below. Domestic Supply Pw +t Domestic Demand 40 45 75 95 105 Which area on the graph corresponds to consumption loss? What is domestic consumption with free trade? O w O Y

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Protective Tariffs

A tariff is a kind of tax that is charged on exported and imported items. It means tariff is charged on both kinds of goods i.e., exported and imported. However, some goods may be exempted from this kind of tariff. Protective Tariffs refer to the charges which a country charged on imported goods to protect its domestic market. It also protects countries Industrialists in their Production. So, that their markets remain intact and do not get dumped by outside supply.

Question

Consider the effects of an import tariff in a small coutnry using the graph
below.
Domestic
Supply
Pw +t
P
Domestic
Demand
40 45
75 95 105
Which area on the graph corresponds to consumption loss? What is
domestic consumption with free trade?
O W
O Y

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