Econ Micro (book Only)
6th Edition
ISBN: 9781337408066
Author: William A. McEachern
Publisher: Cengage Learning
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Question
Chapter 19, Problem 5P
To determine
The minimum level of quota to have an impact on the trade and the conditions when the net welfare loss from an import quota exceeds the net welfare loss from equivalent tariff.
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Figure 7-2
Price
(dollars
per pound)
$3.00
2.50
1.75
0.50
12 18 26 38 45
U.S. Supply
U.S. Demand
Quantity of coffee
(millions of pounds)
Suppose the U.S. government imposes a $0.75 per pound tariff on coffee imports. Figure 7-2 shows the impact of this tariff.
Refer to Figure 7-2. Without the tariff in place, the United States consumes
12 million pounds of coffee.
Pw+tariff
World price (P
26 million pounds of coffee.
33 million pounds of coffee.
45 million pounds of coffee.
Namibia is contemplating on imposing an export subsidy to encourage its businesses to export more. with the use of the diagram, discuss the effect of such an export sudsidy
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Similar questions
- Explain how a subsidy on agricultural goods like sugar adversely affects the income of foreign producers of imported sugar.arrow_forwardShow graphically that for any tariff, there is an equivalent quota that would give the same result. What would be the difference, then, between the two types of trade barriers? Hint: It is not something you can see from the graph.arrow_forward
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