8. Problems and Applications Q8Suppose 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 ofa tariff on textile imports.SupplyDemand3.3.Quantty of TediesPrice 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 (indludingboth imported and domestically produced textiles).Under a textile consumption tax, the quantity of textiles consumed in Isoland isand the quantity produced in Isoland isThe 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 TariffUnder Consumption TaxBefore Tarif or TaxAfterChangeAfterChangeA +B+C+D +E+FA+B- (C +D+E+F)ConsumerSurplusProducer SurplusG.GovernmentNoneE4ERevenueTotal SurplusA+B4C+D +E+F+G A+B C+E+C(D+F)Compared to the tariff, the consumption tax raisesrevenue for the government and hasdeadweightloss associated with it.

The tax imposes on the consumption will increase the price from "Pw" to "Pw +T" and reduce the…

Answered: Suppose the nation of Isoland is an…

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.

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

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Question

8. Problems and Applications Q8
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
Demand
3.
3.
Quantty of Tedies
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 (indluding
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 Tarif or Tax
After
Change
After
Change
A +B+C+D +E+F
A+B
- (C +D+E+F)
Consumer
Surplus
Producer Surplus
G.
Government
None
E
4E
Revenue
Total Surplus
A+B4C+D +E+F+G A+B C+E+C
(D+F)
Compared to the tariff, the consumption tax raises
revenue for the government and has
deadweight
loss associated with it.

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