6) In an open economy, the domestic demand and supply for product X are given by D(P)=120-P and S(P)=2P respectively. The country is small and the world price of X is $70. The country currently has a $ 10 tariff on import and a $15 tariff on export. Find the country's deadweight loss.

6) In an open economy, the domestic demand and supply for product X are given by D(P)=120-P and S(P)=2P respectively. The country is small and the world price of X is $70. The country currently has a $ 10 tariff on import and a $15 tariff on export. Find the country's deadweight loss.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter34: Globalization And Protectionism

Section: Chapter Questions

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Concept explainers

Protective Tariffs

A tariff is a kind of tax that is charged on exported and imported items. It means tariff is charged on both kinds of goods i.e., exported and imported. However, some goods may be exempted from this kind of tariff. Protective Tariffs refer to the charges which a country charged on imported goods to protect its domestic market. It also protects countries Industrialists in their Production. So, that their markets remain intact and do not get dumped by outside supply.

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6) In an open economy, the domestic demand and supply for product X are given by D(P)=120-P
and S(P)=2P respectively. The country is small and the world price of X is $70. The country
currently has a $10 tariff on import and a $15 tariff on export. Find the country's deadweight
loss.

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