Using a domestic-market demand- and supply-curve graph, (a) show the impact of tariff on a small country's import price, domestic demand, domestic supply, import quantity, consumer surplus, producer surplus, government revenue, and total welfare; (b) Is the country unambiguously worse off as a result of the tariff? (c) In the same graph, show how to achieve the same import quantity with an import quota;
Using a domestic-market demand- and supply-curve graph, (a) show the impact of tariff on a small country's import price, domestic demand, domestic supply, import quantity, consumer surplus, producer surplus, government revenue, and total welfare; (b) Is the country unambiguously worse off as a result of the tariff? (c) In the same graph, show how to achieve the same import quantity with an import quota;
Chapter35: International Trade Restrictions
Section: Chapter Questions
Problem 3E
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Q1: Using a domestic-market demand- and supply-curve graph,
(a) show the impact of tariff on a small country's import price, domestic demand, domestic supply, import quantity, consumer surplus , producer surplus , government revenue, and total welfare;
(b) Is the country unambiguously worse off as a result of the tariff?
(c) In the same graph, show how to achieve the same import quantity with an import quota;
(d) When would the tariff and the import quota lead to the same amount of welfare change?
(e) How would the answers to (a) and (b) change for a large country?
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