Microeconomics Due to tariffs imposed on trade, the price of Chinese textiles haveincreased from $4 to $5. AS a result of this price increase, Vietnamesetextiles, which are exempt from the tariff, have seen their demand gofrom 600 to 800. Please calculate the elasticity using the midpointmethod and explain why demand for Vietnamese good changed theway they did.

Answered: Due to tariffs imposed on trade, the…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Microeconomics

Due to tariffs imposed on trade, the price of Chinese textiles have
increased from $4 to $5. AS a result of this price increase, Vietnamese
textiles, which are exempt from the tariff, have seen their demand go
from 600 to 800. Please calculate the elasticity using the midpoint
method and explain why demand for Vietnamese good changed the
way they did.

Expert Solution

Step 1

In an international market, producer and consumer behavior are same as the domestic market as the increased price of any product will decrease its demand and increase its supply in the global market.

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