Assume that the functions of a demand curve and of a supply curve of a small country M for commodity X are Dx = 130 – Px and Sx = -10 + Px respectively. The unit price of commodity X imported from the rest of the world is 10 USD in the condition of the free trade. Draw the graph and calculate the increase of the producer’s surplus, the decrease of the consumer’s surplus, and the government revenue if the country M would impose the import tariff at the rate of 20% on the commodity X imported from the rest of the world?
Assume that the functions of a demand curve and of a supply curve of a small country M for commodity X are Dx = 130 – Px and Sx = -10 + Px respectively. The unit price of commodity X imported from the rest of the world is 10 USD in the condition of the free trade. Draw the graph and calculate the increase of the producer’s surplus, the decrease of the consumer’s surplus, and the government revenue if the country M would impose the import tariff at the rate of 20% on the commodity X imported from the rest of the world?
Chapter28: International Trade
Section: Chapter Questions
Problem 7P
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Assume that the functions of a demand curve and of a supply curve of a small country M for commodity X are Dx = 130 – Px and Sx = -10 + Px respectively. The unit
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