Microeconomics (7th Edition)
7th Edition
ISBN: 9780134737508
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
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Chapter 9, Problem 9.4.8PA
Subpart (a):
To determine
Economic effect of tariff on import.
Subpart (b):
To determine
Subpart (c):
To determine
Consumer surplus.
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8. Which of the following would be a deadweight loss from a tariff?
A) The shift of consumer surplus to government
B) The increase in producer surplus
c) The decrease in consumer surplus
D) The decrease in consumer surplus due to a drop in consumption
3|Page
9. Use the graph below and the following information to answer the next
question. The world price of soybeans is $2.00 per bushel, and the importing
country is small enough not to affect the world price.
2.25
2.00
World price
60 70
130 140
Qimillions bushels
Based on Figure above, suppose the government puts a tariff of $0.25 per bushel on
soybean imports. How much will the tariff reduce imports?
A) Imports will decrease by 10 million bushels.
B) Imports will decrease by 20 million bushels.
C) Imports will decrease by 60 million bushels.
D) Imports will not change after the tariff.
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?
[India is the world’s largest consumer of sugar. Assume the world price for sugar is $750 per ton.]
[Assume India currently has a tariff of $50 per ton on sugar and imports 7 million tons of sugar. Show this situation in a graph. Label the quantity demanded and the quantity supplied domestically and imports clearly on a graph. Explain your graph in 3-4 sentences.
2. [ Suppose India decides to remove the tariff, show the effect of this change on India’s imports on the graph. Clearly label the new domestic quantity demanded and the quantity supplied. You must use the same graph as you have drawn in answer to Part a to show this new scenario. How does this policy affect consumers, producers, and the government in India? You only have to state who benefits or harms from the policy.
3. [Label the areas in your graph and fill in the following table.
With Tariff
Free Trade (after the tariff is removed)
Consumer Surplus
Producer Surplus
Government…
Chapter 9 Solutions
Microeconomics (7th Edition)
Ch. 9 - Prob. 9.1.1RQCh. 9 - Prob. 9.1.2RQCh. 9 - Prob. 9.1.3PACh. 9 - Prob. 9.1.4PACh. 9 - Prob. 9.1.5PACh. 9 - Prob. 9.2.1RQCh. 9 - Prob. 9.2.2RQCh. 9 - Prob. 9.2.3PACh. 9 - Prob. 9.2.4PACh. 9 - Prob. 9.2.5PA
Ch. 9 - Prob. 9.2.6PACh. 9 - Prob. 9.2.7PACh. 9 - Prob. 9.2.8PACh. 9 - Prob. 9.2.9PACh. 9 - Prob. 9.3.1RQCh. 9 - Prob. 9.3.2RQCh. 9 - Prob. 9.3.3RQCh. 9 - Prob. 9.3.4RQCh. 9 - Prob. 9.3.5PACh. 9 - Prob. 9.3.6PACh. 9 - Prob. 9.3.7PACh. 9 - Prob. 9.3.8PACh. 9 - Prob. 9.3.9PACh. 9 - Prob. 9.3.10PACh. 9 - Prob. 9.3.11PACh. 9 - Prob. 9.3.12PACh. 9 - Prob. 9.3.13PACh. 9 - Prob. 9.3.14PACh. 9 - Prob. 9.4.1RQCh. 9 - Prob. 9.4.2RQCh. 9 - Prob. 9.4.3PACh. 9 - Prob. 9.4.4PACh. 9 - Prob. 9.4.5PACh. 9 - Prob. 9.4.6PACh. 9 - Prob. 9.4.7PACh. 9 - Prob. 9.4.8PACh. 9 - Prob. 9.4.9PACh. 9 - Prob. 9.4.10PACh. 9 - Prob. 9.4.11PACh. 9 - Prob. 9.4.12PACh. 9 - Prob. 9.4.13PACh. 9 - Prob. 9.4.14PACh. 9 - Prob. 9.5.1RQCh. 9 - Prob. 9.5.2RQCh. 9 - Prob. 9.5.3RQCh. 9 - Prob. 9.5.4PACh. 9 - Prob. 9.5.5PACh. 9 - Prob. 9.5.6PACh. 9 - Prob. 9.5.7PACh. 9 - Prob. 9.5.8PACh. 9 - Prob. 9.5.9PACh. 9 - Prob. 9.5.10PACh. 9 - Prob. 9.1CTECh. 9 - Prob. 9.2CTECh. 9 - Prob. 9.3CTE
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