Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Question
Chapter 9, Problem 9IAPA
To determine
The argument to encourage to introduce tariff and the gaining and losing person as a result of Mexico's tariff is to be determined.
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What is the effect of placing tariffs on products imported into the U.S. from other countries? Are there any problems with this?
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?
Vietnam has a policy of free trade in motorcycles which are sold in world markets at a price of 10,000 per motorcycle.
Under free trade, Vietnam produces 100,000 motorcycles and imports 100,000 motorcycles. To provide some protection
to the domestic industry, Vietnam imposes an import tariff of $1500 per motorcycle. With this tariff in place, production
in Vietnam rises by 5,000 motorcycles and consumption drops by the same amount. Calculate the effects of the tariff on:
a. Consumer Surplus b. Producer Surplus c. Government Revenues d. Overall Welfare e. If the tariff imposed by the
Vietnamese had led to small reduction in world prices of, say, 250 dollars, how, qualitatively, would the welfare
calculations (a), (b), (c) and (d) above change?
Chapter 9 Solutions
Foundations of Economics (8th Edition)
Ch. 9 - Prob. 1SPPACh. 9 - Prob. 2SPPACh. 9 - Prob. 3SPPACh. 9 - Prob. 4SPPACh. 9 - Prob. 5SPPACh. 9 - Prob. 6SPPACh. 9 - Prob. 7SPPACh. 9 - Prob. 8SPPACh. 9 - Prob. 9SPPACh. 9 - Prob. 10SPPA
Ch. 9 - Prob. 11SPPACh. 9 - Prob. 1IAPACh. 9 - Prob. 2IAPACh. 9 - Prob. 3IAPACh. 9 - Prob. 4IAPACh. 9 - Prob. 5IAPACh. 9 - Prob. 6IAPACh. 9 - Prob. 7IAPACh. 9 - Prob. 8IAPACh. 9 - Prob. 9IAPACh. 9 - Prob. 1MCQCh. 9 - Prob. 2MCQCh. 9 - Prob. 3MCQCh. 9 - Prob. 4MCQCh. 9 - Prob. 5MCQCh. 9 - Prob. 6MCQCh. 9 - Prob. 7MCQ
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