MANAGERIAL/ECON+BUS/STR CONNECT ACCESS
9th Edition
ISBN: 2810022149537
Author: Baye
Publisher: MCG
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Question
Chapter 10, Problem 21PAA
To determine
To find: The nash equilibrium outcome when both countries independently impose tariff.
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Check out a sample textbook solutionStudents have asked these similar questions
For many purposes, the use of a tariff is said by economists to be “second best.” This means that
Group of answer choices
Another policy exists that would accomplish the same purpose as the tariff at lower economic cost.
The tariff does not help those with the highest incomes, but only those with the second highest.
The tariff benefits the country only by making other countries worse off.
The tariff cannot be beneficial for the country as a whole.
Assume a hypothetical city in the United States at the start of the pandemic
consumed 250 boxes of surgical gowns at a price of $120 per box. As the
pandemic spread and U.S. demand surged, the United States removed the pre
pandemic tariffs on imported medical supplies.
Which of the following statements about the city's consumption of surgical
gowns during the pandemic would be correct, based on the graph below?
The Impact of a Tariff
Price
(P-120
Tarit
P-S100
PS
Dado
Imports with
atart
Da
100
150
260
300
1,000 6,000
10,000
Quantity
(Sugical Gon
Correct Answer(s)
Government revenue will fall by $2,000.
The new equilibrium quantity will be 5,000 boxes.
The supply curve will shift to the left.
The new equilibrium price for a box of gowns will be $100.
The removal of the tariff will increase demand.
Incorrect Answer(s)
Spain imports cigars from Cuba. The Spanish health ministry is worried about the negative effects of tobacco on passive smokers and is considering three different options for reducing tobacco consumption: A quota on cigar imports from Cuba, an import tariff on cigars, and a consumption tax.a) Using graphs analyze the welfare effects of the three policies. (While answering this question assume that the Spanish cigar industry operates under perfect competition.)b) In welfare terms, how would you classify the 3 policies?c) Which cabinet ministry would like to see a different classification in (b)? Why?
Chapter 10 Solutions
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