Explain the effect of tariffs on income distribution using figures.(clue: draw production possibilities curve, general equilibrium theory of tariffs)
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- 1 Read her Majesty’s Treasury Report and answer the following questions. Let us assume that as a consequence of step 3., the UK instantly begins importing US cars instead of European cars. Draw a new graph, showing the domestic equilibrium, the European price, the US price, tariffs and the new equilibrium price and quantity, with all the welfare effects. The United States currently imports all of its coffee. The annual demand for coffee by U.S. consumers is given by the demand curve Qd = 150 − 10P, where Qd is quantity (in millions of pounds) and P is the market price per pound of coffee. Suppose the domestic supply is Qs = 10P −50. The U.S. coffee market is competitive. Suppose that the world price of coffee is $6. Congress is considering a tariff on coffee imports of $2 per pound. (a) Find the producer and consumer surplus if there was no trade. (b) Calculate the consumer and producer surplus after we engage in free trade. (c) If the tariff is imposed calculate the changes to consumer and producer surplus. (d) Other than lower prices, provide two benefits that can occur as a result of free trade.Analyze the impact of the tariff on domestic production, consumption, and imports of solar panels. Include a graph with properly labeled axes, demand and supply curves, and tariff levels to illustrate your answer.
- 1. Consider the following: Canada U.S. Rest of the World (ROW) PxC=$8 PXUS=$5 PxR=$4 (i) Tariff restrictions in effect: Suppose Canada imposes a tariff on its imports of good X. From whom would Canada import? What is the implicit maximum tariff rate so that trade could still exist?With a 5 peso import tariff (compared to free trade) domestic producers in The Philippines gain an amount equivalent to area ACHD IAB DABE JHD P J Domestic Demand A B. 30 pesos Domestic Supply D F G H 25 pesos E 400 800 2100 2900 This graph illustrates the demand and supply curves for cell phones in The Philippines. With free trade, the retail price in the domestic market is 25 Philippine pesos. In this market, an import tariff would cause prices to go up by the full amount of the tariff. With a 5 peso import tariff (compared to free trade) domestic producers in The Philippines gain an amount equivalent to areaThe following figure illustrates the tomato market for Mexico, assumed to be a "small" country that is unable t to affect the world price. Suppose the world price of tomato is given and constant at $100 per ton. SM is the domestic supply and DM is the domestic demand for Mexico. Now suppose the Mexican government provides production subsidy of $200 per ton to its tomato producers. SM (with subsidy) is Mexico's supply schedule with production subsidy. Price ($) 800 300 100 0 2 8 SM 20 SM (with subsidy) World price DM Tons of Tomatoes Refer to the figure above. As a result of the production subsidy, the deadweight loss to Mexico equals [Select]
- The following graph represents Canada's domestic supply and demand for coffee.Assume that Brazil is the only country producing and selling coffee in the world market. C) After numerous complaints from domestic coffee producers, the governmentimposes a $0.50 per pound tariff on all imported coffee. i. What will happen to the domestic price of coffee?ii. What will be the new domestic quantity supplied and domestic quantity demanded?iii. How much coffee will now be imported from Brazil?iv. How much revenue will the government receive from the $0.50 per pound tariff?v. Who ultimately ends up paying the $0.50 per pound tariff? Why?vi. What is the deadweight loss due to the tariff?Use the following graph, where Sd and Dd are the domestic supply and demand for a product and Pc is the world price of that product to answer the next question. Price a Pe 0 E V F K G H X Quantity у Z Sd + Q is the product supply curve after an import quota is imposed. A quota of y-w will result in quota rent equal to areas OA) F + G + H+ J. C) G + H. OD) F + J. $.+Q B) E+F+G+H+ J.Price per Saddle Domeslic Supply A P2 Tariff World Price C P1 Domestic Demand Q1 Q2 Quantity of Saddles Q3 Q4 With the tariff in place, the new quantity of imports equals Q4 - Q1 Q2 Q3 O Q3- Q2
- South Korea to Resume US Beef Imports South Korea will open its market to most U.S. beef. South Korea banned imports of U.S. beef in 2003 amid concerns over a case of mad cow disease in the United States. The ban closed what was then the third-largest market for U.S. beef exporters. Source: CNN, May 29, 2008 The graph shows the market for beef in the United States. Assume that South Korea is the only importer of U.S. beef. Draw a point of the quantity demanded and the price when South Korea allows imports of beef from the United States. Label this point 1. Draw a point at the quantity supplied by U.S. beef farmers and the price when South Korea allows imports of beef from the United States. Label this point 2. Draw a point to show the price and quantity of beef when South Korea bans imports of U.S. beef. In the United States, the winners from the ban on U.S. beef are losers are A. producers; consumers OB. consumers; producers and the 12- 10- 4- 2- Price (dollars per pound) 80 S World…Finland imports shoes into its country; they are a price taker in this market. Suppose the world price of shoes is $40. If Finland imposes a $10 tariff on shoes, what would be the domestic price of shoes and what will happen to the quantity bought? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. The quantity bought will increase and the price will be $30. a The quantity bought will fall and the price will be $30. The quantity bought will fall and the price will be $50. The quantity bought will increase and the price will be $50.A 5 peso import tariff would raise how much government revenue? a) $3,000 b) 9,500 c) $12,500 d) $6,500 Р J Domestic Demand A B 30 pesos K C Domestic Supply D F G H 25 pesos E 400 800 2100 2900 This graph illustrates the demand and supply curves for cell phones in The Philippines. With free trade, the retail price in the domestic market is 25 Philippine pesos. In this market, an import tariff would cause prices to go up by the full amount of the tariff. A 5 peso import tariff would raise how much government revenue?
