Suppose the domestic shoe demand and supply equations in a small open economy are: P = 168-4QD P = 24+2QS On the other hand, the shoe demand and supply equations of the large open economy are: Let's assume: P = 360- 6QD P = 40 + 2QS A) Suppose the large country imposes a customs tax of $ 12 per unit of good on top of the free trade price, and the smaller country drops it below $ 4. For the Large country of customs tax application in the light of above information What would happen to these: 1- In the welfare of the consumer. 2- In the welfare of the manufacturer.
Suppose the domestic shoe demand and supply equations in a small open economy are: P = 168-4QD P = 24+2QS On the other hand, the shoe demand and supply equations of the large open economy are: Let's assume: P = 360- 6QD P = 40 + 2QS A) Suppose the large country imposes a customs tax of $ 12 per unit of good on top of the free trade price, and the smaller country drops it below $ 4. For the Large country of customs tax application in the light of above information What would happen to these: 1- In the welfare of the consumer. 2- In the welfare of the manufacturer.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Suppose the domestic shoe
P = 168-4QD
P = 24+2QS
On the other hand, the shoe demand and supply equations of the large open economy are: Let's assume:
P = 360- 6QD
P = 40 + 2QS
A) Suppose the large country imposes a customs tax of $ 12 per unit of good on top of the free trade
For the Large country of customs tax application in the light of above information
What would happen to these:
1- In the welfare of the consumer.
2- In the welfare of the manufacturer.
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