Calculate the total effect on welfare of a tariff of 15 per unit levied on imports.

Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter9: Application: International Trade
Section: Chapter Questions
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Suppose that Estonia, which is a"small economy, and it can import plastic chairs at a price of 20 per unit The domestic supply curve of plastic chairs is the following:

S=40+10P

And the demand curve in Estonia for plastic chairs is:

 

D=800-5P

In addition, each unit of plastic chair production yields a marginal social benefit of 10.

 

a) Calculate the total effect on welfare of a tariff of 15 per unit levied on imports.

 

 

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