A lobbyist for the coal industry in the US argues for increased tariffs. a) derive graphically (make sure that you label the graph completely) the impact of such a tariff on the quantity imported, the quantity produced domestically, and the price at which coal can be purchased for a standard supply and demand graph. Assume that the world price of coal is smaller than the domestic equilibrium price, and that the US is a smopec. (10 points) b) Illustrate the producer surplus, consumer surplus, and deadweight loss after the tariff has been put in place. (10 points) c) discuss briefly whether a tariff is likely to be a good idea for America or a bad idea. (10 points)
A lobbyist for the coal industry in the US argues for increased tariffs. a) derive graphically (make sure that you label the graph completely) the impact of such a tariff on the quantity imported, the quantity produced domestically, and the price at which coal can be purchased for a standard supply and demand graph. Assume that the world price of coal is smaller than the domestic equilibrium price, and that the US is a smopec. (10 points) b) Illustrate the producer surplus, consumer surplus, and deadweight loss after the tariff has been put in place. (10 points) c) discuss briefly whether a tariff is likely to be a good idea for America or a bad idea. (10 points)
Principles of Economics, 7th Edition (MindTap Course List)
7th Edition
ISBN:9781285165875
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter9: Application: International Trade
Section: Chapter Questions
Problem 8PA
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Transcribed Image Text:A lobbyist for the coal industry in the US argues for increased tariffs.
a) derive graphically (make sure that you label the graph completely) the impact of
such a tariff on the quantity imported, the quantity produced domestically, and the
price at which coal can be purchased for a standard supply and demand graph.
Assume that the world price of coal is smaller than the domestic equilibrium price,
and that the US is a smopec. (10 points)
b) Illustrate the producer surplus, consumer surplus, and deadweight loss after the
tariff has been put in place. (10 points)
c) discuss briefly whether a tariff is likely to be a good idea for America or a bad
idea. (10 points)
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