. Go back to the situation before the tariff was introduced. Now suppose the world supply curve is pworld = qworld/8. Draw the world market for this good, the equilibrium world price & explain the impact on world demand of a levying of a tariff of 1?
Hi can you please ONLY help me with the calculations and working of question 5?
Imagine a market with demand and supply as follows: D: p=10-q and S: p=q.
1. Find the
I.
3. Now suppose a $1 tariff is introduced, making the local price $2. You may assume for now the imposition of a tariff does not change the world price. Compare welfare (including the government tariff revenue)
I. With the situation before the tariff
II. With the situation in autarky
4. Suppose this country is the only country in the world that demands this good. Derive a world demand for the good over the range from Price = 0 to Price = autarky Price. (hint: The world demand is the demand for imports to this country.)
5. Go back to the situation before the tariff was introduced. Now suppose the world supply curve is pworld = qworld/8. Draw the world market for this good, the equilibrium world price & explain the impact on world demand of a levying of a tariff of 1?
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