**Effects of Tariff**On the basis of the attached diagram that reflects the effect of imposing a tariff on an importable product. Identify these effects on the diagram and complete the following table (show all calculation steps):| **EFFECTS** | **CALCULATIONS** | **ANSWER** ||-----------------------------------------|------------------|------------|| 1. Consumption Effect | | || 2. Production Effect | | || 3. Revenue Effect | | || 4. Inefficiency of Tariff (deadweight loss) | | || 5. Change in Consumer Surplus | | || 6. Producer Surplus before Trade | | || 7. Change in Producer Surplus | | |*Please note: Area of a triangle = 1/2(base × height) = 1/2bh; Area of rectangle = length × width = LW* ### Figure 1: Effects of TariffThis diagram illustrates the impact of a tariff on the market, showing the changes in prices and quantities. The chart is a standard supply and demand graph with price on the vertical axis and quantity on the horizontal axis.#### Key Elements:- **Supply Curve**: A upward-sloping line indicating the relationship between price and quantity supplied.- **Demand Curve**: A downward-sloping line indicating the relationship between price and quantity demanded.- **Prices**: - $ P_o = 3 $: The original domestic price without any import competition. - $ P_w = 6 $: The world price without tariff. - $ P_w + t = 10 $: The world price with the tariff included.- **Equilibrium Points**: - **Point A**: Intersection of the supply curve and the original domestic price. - **Point E**: Intersection of the supply curve and world price (without tariff). - **Point B**: Intersection of the demand curve and world price (plus tariff). - **Point D**: Intersection of the demand curve and the supply curve.#### Areas:Highlighted areas represent different economic effects due to the tariff:- **a, b, c, d**: Represent changes in consumer surplus due to tariff imposition.- **e**: Represents additional producer surplus due to the increased price.- **f, g, h, i, j**: Represent changes in consumer surplus, deadweight loss, and loss of gains from trade.#### Quantities:- $40$, $60$, $100$, $120$: Indicate the quantities at different intersections and how quantity supplied and demanded changes in response to the tariff.This graph effectively shows how tariffs can lead to higher prices, reduced quantities, and a reallocation of surplus between producers, consumers, and the government, often resulting in deadweight loss to the economy.

Using products and services by households is referred to as consumption in economics. Contrary to…

Effects of Tariff.docx On the basis of the attached diagram that reflects the effect of imposing a tariff on an importable product. Identify these effects on the diagram and complete the following table( show all calculation steps): EFFECTS 1. Consumption Effect 2 Production Effect 3 Revenue Effect 4 Inefficiency of Tariff (dead weight loss) 5 Change in Consumer Surplus 6 Producer Surplus before Trade 7 Change in Producer Surplus CALCULATIONS ANSWER Please note: Area of a triangle = 1\2(base x height) = 1\2bh; Area of rectangle =length x width = LW

Effects of Tariff.docx On the basis of the attached diagram that reflects the effect of imposing a tariff on an importable product. Identify these effects on the diagram and complete the following table( show all calculation steps): EFFECTS 1. Consumption Effect 2 Production Effect 3 Revenue Effect 4 Inefficiency of Tariff (dead weight loss) 5 Change in Consumer Surplus 6 Producer Surplus before Trade 7 Change in Producer Surplus CALCULATIONS ANSWER Please note: Area of a triangle = 1\2(base x height) = 1\2bh; Area of rectangle =length x width = LW

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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