The domestic demand and supply of some good is as follows: Qd = 100 -0.25P Qs = P - 50 The world price (which will not be affected by anything that we do) is $60. (a) Assume that the government imposes a tariff of $20 per unit. Calculate: (i) the domestic price that will result if the tariff is imposed (ii) the dollar gain or loss to domestic consumers (iii) the dollar gain or loss to domestic producers (iv) the government revenue from the tariff (v) the deadweight loss from the tariff (b) Find the tariff that the government should have imposed if they wanted to fully eliminate imports. (c) Assume that the government wants to implement the domestic price you found in (a-i) by imposing an import quota rather than a tariff. Calculate the respective import quota.

The domestic demand and supply of some good is as follows: Qd = 100 -0.25P Qs = P - 50 The world price (which will not be affected by anything that we do) is $60. (a) Assume that the government imposes a tariff of $20 per unit. Calculate: (i) the domestic price that will result if the tariff is imposed (ii) the dollar gain or loss to domestic consumers (iii) the dollar gain or loss to domestic producers (iv) the government revenue from the tariff (v) the deadweight loss from the tariff (b) Find the tariff that the government should have imposed if they wanted to fully eliminate imports. (c) Assume that the government wants to implement the domestic price you found in (a-i) by imposing an import quota rather than a tariff. Calculate the respective import quota.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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