Macroeconomics
13th Edition
ISBN: 9780134735696
Author: PARKIN, Michael
Publisher: Pearson,
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Question
Chapter 7, Problem 28APA
(a)
To determine
How the tariff on the smart phones and tablet imports changes the country's production, consumption and import of these items and illustrating with the help of a graph.
(b)
To determine
The changes in the
(c)
To determine
Who in the country will oppose the tariff cut?
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Students have asked these similar questions
Georgia and Moldova are famous for their quality of wine and the United Kingdom decides to
start importing from them. There is an 5£ tariff on imported wine. Considering the graph
below, where does the UK buy its wine from and how much does it cost on the domestic
market?
Price per bottle
£10
£7
Moldovan price
£5
Georgian price
UK demand for imported wine
Quantity
(millions of bottles per year)
10
15
22
Suppose the UK joins a trade bloc with Moldova and maintains its 5£ tariff on wine from
outside the bloc.
a) What will the new domestic price be?
b) How much do consumers gain/lose?
c) How about the government?
d) Is there trade creation or trade dıversion or both?
e) How much does the UK gain/lose?
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.
Q3: Using a domestic-market demand- and supply-curve graph,
show the impact of tariff on a small country's import price, domestic demand, domestic supply, import quantity, consumer surplus, producer surplus, government revenue, and total welfare;
Is the country unambiguously worse off as a result of the tariff?
In the same graph, show how to achieve the same import quantity with an import quota;
When would the tariff and the import quota lead to the same amount of welfare change?
How will the answer to (a) and (b) change if the country uses a subsidy that is equivalent to the tariff rate to help domestic producers?
How would the answers to (a) and (b) change for a large country?
Your answer:
Chapter 7 Solutions
Macroeconomics
Ch. 7.1 - Prob. 1RQCh. 7.1 - Prob. 2RQCh. 7.2 - Prob. 1RQCh. 7.2 - Prob. 2RQCh. 7.2 - Prob. 3RQCh. 7.3 - Prob. 1RQCh. 7.3 - Prob. 2RQCh. 7.3 - Prob. 3RQCh. 7.3 - Prob. 4RQCh. 7.3 - Prob. 5RQ
Ch. 7.4 - Prob. 1RQCh. 7.4 - Prob. 2RQCh. 7.4 - Prob. 3RQCh. 7.4 - Prob. 4RQCh. 7.4 - Prob. 5RQCh. 7 - Prob. 1SPACh. 7 - Prob. 2SPACh. 7 - Prob. 3SPACh. 7 - Prob. 4SPACh. 7 - Prob. 5SPACh. 7 - Prob. 6SPACh. 7 - Prob. 7SPACh. 7 - Prob. 8SPACh. 7 - Prob. 9SPACh. 7 - Prob. 10SPACh. 7 - Prob. 11SPACh. 7 - Prob. 12APACh. 7 - Prob. 13APACh. 7 - Prob. 14APACh. 7 - Prob. 15APACh. 7 - Prob. 16APACh. 7 - Prob. 17APACh. 7 - Prob. 18APACh. 7 - Prob. 19APACh. 7 - Prob. 20APACh. 7 - Prob. 21APACh. 7 - Prob. 22APACh. 7 - Prob. 23APACh. 7 - Prob. 24APACh. 7 - Prob. 25APACh. 7 - Prob. 26APACh. 7 - Prob. 27APACh. 7 - Prob. 28APA
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