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.

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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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.

 

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