Having rejected a tariff on textiles (a tax on imports), the president of Isoland is now considering the same-sized tax on textile consumption (including both imported and domestically produced textiles). Under a textile consumption tax, the quantity of textiles consumed in Isoland is and the quantity produced in Isoland is The following table shows the effect of an import tariff on the nation of Isoland. Complete the remaining columns of the following table by indicating the effect of the same-sized tax on textile consumption. Under Tariff Under Consumption Tax Before Tariff or Tax After Change After Change Consumer A +B+C+D+E+F A +B - (C+D+E+ F) Surplus Producer Surplus G C+G Government None E +E Revenue Total Surplus A+B+C+D+E+F+G A+B+C+E+G (D+F) has a smaller deadweight loss associated with The raises more revenue for the government, and the

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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Suppose the nation of Isoland is an importer of textiles and is looking for a way to raise government revenue. The following graph shows the effect of
a tariff on textile imports.
Supply
Pw+T
F
Demand
Pw
Os 1
Os2
O.1
Quantity of Textiles
Price of Textiles
Transcribed Image Text:Suppose the nation of Isoland is an importer of textiles and is looking for a way to raise government revenue. The following graph shows the effect of a tariff on textile imports. Supply Pw+T F Demand Pw Os 1 Os2 O.1 Quantity of Textiles Price of Textiles
Having rejected a tariff on textiles (a tax on imports), the president of Isoland is now considering the same-sized tax on textile consumption (including
both imported and domestically produced textiles).
Under a textile consumption tax, the quantity of textiles consumed in Isoland is
and the quantity produced in Isoland is
The following table shows the effect of an import tariff on the nation of Isoland.
Complete the remaining columns of the following table by indicating the effect of the same-sized tax on textile consumption.
Under Tariff
Under Consumption Tax
Before Tariff or Tax
After
Change
After
Change
Consumer
A +B+C+D+E+F
A +B
- (C+D+E+F)
Surplus
Producer Surplus
G
C+G
+C
E
+E
Government
None
Revenue
A +B+C+D+E+F+G
A +B+C+E+G
-(D+F)
Total Surplus
has a smaller deadweight loss associated with
The
v raises more revenue for the government, and the
it.
Transcribed Image Text:Having rejected a tariff on textiles (a tax on imports), the president of Isoland is now considering the same-sized tax on textile consumption (including both imported and domestically produced textiles). Under a textile consumption tax, the quantity of textiles consumed in Isoland is and the quantity produced in Isoland is The following table shows the effect of an import tariff on the nation of Isoland. Complete the remaining columns of the following table by indicating the effect of the same-sized tax on textile consumption. Under Tariff Under Consumption Tax Before Tariff or Tax After Change After Change Consumer A +B+C+D+E+F A +B - (C+D+E+F) Surplus Producer Surplus G C+G +C E +E Government None Revenue A +B+C+D+E+F+G A +B+C+E+G -(D+F) Total Surplus has a smaller deadweight loss associated with The v raises more revenue for the government, and the it.
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