Consider the case of the following large country (all prices are measured in euros, and quantities are measured in single units): – Domestic demand curve: P = 3600 –3Q – Domestic supply curve: P = 2Q – World free trade price of imports = 140 euros per unit – When the tariff is introduced, domestic prices rise by exactly one third of the amount of the tariff. Calculate the following. Also show your workouts, draw a diagram depicting the importing country
Consider the case of the following large country (all prices are measured in euros, and quantities are measured in single units):
– Domestic demand curve: P = 3600 –3Q
– Domestic supply curve: P = 2Q
– World free trade price of imports = 140 euros per unit
– When the tariff is introduced, domestic prices rise by exactly one third of the amount of the tariff.
Calculate the following. Also show your workouts, draw a diagram depicting the importing country market under free trade and with a tariff.
With a 30 euro specific tariff:
The change in
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The change in
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The amount of tariff revenue, in euros:
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The change in domestic welfare going from free trade to the tariff, in euros:
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