Managerial Economics & Business Strategy (Mcgraw-hill Series Economics)
Managerial Economics & Business Strategy (Mcgraw-hill Series Economics)
9th Edition
ISBN: 9781259290619
Author: Michael Baye, Jeff Prince
Publisher: McGraw-Hill Education
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Chapter 10, Problem 21PAA
To determine

To find: The nash equilibrium outcome when both countries independently impose tariff.

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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?
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