1. Assume the Philippines is an importer of television in the United States. Consumers buy 800,000 televisions per year, half of which are produced domestically, and half are imported. Assume that the world price is $150 each television. If there were no televisions sold, a local consumer's willingness to buy is $400 and the costs to sellers is $100. A. Draw a diagram showing the world price, market supply and market demand for television in the local market. B. Show and calculate consumer and producer surplus at the world price. Show all the required solutions. C. Suppose the Philippine government restricts the importation of television by putting a 20 percent tariff rate. Suppose this tariff rate leads to a fall of the consumers demand to 700,000 televisions each year, and local producers supply 500,000 each year. Illustrate these changes in your diagram above. How many televisions should the country imports? Calculate the change in consumer surplus, producer surplus and total surplus.
1. Assume the Philippines is an importer of television in the United States. Consumers buy 800,000
televisions per year, half of which are produced domestically, and half are imported. Assume that
the world price is $150 each television. If there were no televisions sold, a local consumer's
willingness to buy is $400 and the costs to sellers is $100.
A. Draw a diagram showing the world price, market supply and market
in the local market.
B. Show and calculate
solutions.
C. Suppose the Philippine government restricts the importation of television by putting a 20
percent tariff rate. Suppose this tariff rate leads to a fall of the consumers demand to
700,000 televisions each year, and local producers supply 500,000 each year. Illustrate
these changes in your diagram above. How many televisions should the country imports?
Calculate the change in
D. Calculate the government revenue raised and the net national loss of a tariff in (C).
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