A military coup in Atopia has overthrown the government. The new leaders, proud defenders of the national heritage declared that all food imports will be subjected to a 20 per cent import tax, paid to the customs officers at every port of entry. Assume that Atopia only produce and consume two goods namely wool and food and at present, they are benefiting from free trade by exporting wool and importing food. Question 1 Using a diagram and the general equilibrium framework, explain the effects of imposing the protective import tariff on the Atopian economy.

A military coup in Atopia has overthrown the government. The new leaders, proud defenders of the national heritage declared that all food imports will be subjected to a 20 per cent import tax, paid to the customs officers at every port of entry. Assume that Atopia only produce and consume two goods namely wool and food and at present, they are benefiting from free trade by exporting wool and importing food. Question 1 Using a diagram and the general equilibrium framework, explain the effects of imposing the protective import tariff on the Atopian economy.

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter19: International Trade

Section: Chapter Questions

Problem 12PAE

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