Suppose that, as part of an international trade agreement, the U.S. government reduces the tariff on imported coffee. Will this affect the supply or the demand for coffee? Why? Which determinant of demand or supply is being affected? Show graphically with before- and after-curves on the same axes. How will this change the equilibrium price and quantity of coffee? Explain your reasoning.
Scenario 1: Suppose that, as part of an international trade agreement, the U.S. government reduces the tariff on imported coffee. Will this affect the supply or the demand for coffee? Why? Which determinant of
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Lower tariff on imported coffee increases supply of imported coffee, which increases market supply of coffee in the US.
The determinant of supply is: Increase in number of sellers in the market.
Higher supply shifts supply curve to right, which decreases price and incraeses quantity.
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