Homework Help is Here – Start Your Trial Now!
Business
Economics
the ending of problem question Complete the following table to summarize your results from the previous two graphs.   Under Free Trade Under a Tariff (Dollars) (Dollars) Consumer Surplus     Producer Surplus     Government Revenue 0     Based on your analysis, as a result of the tariff, Kenya’s consumer surplus    by    , producer surplus    decrease or increase by   , and the government collects $

the ending of problem question Complete the following table to summarize your results from the previous two graphs.   Under Free Trade Under a Tariff (Dollars) (Dollars) Consumer Surplus     Producer Surplus     Government Revenue 0     Based on your analysis, as a result of the tariff, Kenya’s consumer surplus    by    , producer surplus    decrease or increase by   , and the government collects $

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
See similar textbooks
icon
Related questions
Question

the ending of problem question

Complete the following table to summarize your results from the previous two graphs.
 
Under Free Trade
Under a Tariff
(Dollars)
(Dollars)
Consumer Surplus
 
 
Producer Surplus
 
 
Government Revenue 0
 
 
Based on your analysis, as a result of the tariff, Kenya’s consumer surplus    by 
 
, producer surplus    decrease or increase by
 
, and the government collects $ 
 
in revenue. Therefore, the net welfare effect is an gain or loss 
of $
.
3. Welfare effects of a tariff in a small country Suppose Kenya is open to free trade in the world market for wheat. Because of Kenya's small size, the demand for and supply of wheat in Kenya do not affect the world price. The following graph shows the domestic wheat market in Kenya. The world price of wheat is Pw = $250 per ton. On the following graph, use the green triangle (triangle symbols) to shade the area representing consumer surplus (CS) when the economy is at the free-trade equilibrium. Then, use the purple triangle (diamond symbols) to shade the area representing producer surplus (PS). (?) Domestic Demand Domestic Supply 490 460 Cs 430 400 PS 370 340 310 280 P.. 250 220 190 20 40 60 80 100 120 140 160 180 200 QUANTITY (Tons of wheat) If Kenya allows international trade in the market for wheat, it will import tons of wheat. Now suppose the Kenyan government decides to impose a tariff of $60 on each imported ton of wheat. After the tariff, the price Kenyan consumers pay for a ton of wheat is $ and Kenya will import tons of wheat. PRICE (Dollars per ton)
Transcribed Image Text:3. Welfare effects of a tariff in a small country Suppose Kenya is open to free trade in the world market for wheat. Because of Kenya's small size, the demand for and supply of wheat in Kenya do not affect the world price. The following graph shows the domestic wheat market in Kenya. The world price of wheat is Pw = $250 per ton. On the following graph, use the green triangle (triangle symbols) to shade the area representing consumer surplus (CS) when the economy is at the free-trade equilibrium. Then, use the purple triangle (diamond symbols) to shade the area representing producer surplus (PS). (?) Domestic Demand Domestic Supply 490 460 Cs 430 400 PS 370 340 310 280 P.. 250 220 190 20 40 60 80 100 120 140 160 180 200 QUANTITY (Tons of wheat) If Kenya allows international trade in the market for wheat, it will import tons of wheat. Now suppose the Kenyan government decides to impose a tariff of $60 on each imported ton of wheat. After the tariff, the price Kenyan consumers pay for a ton of wheat is $ and Kenya will import tons of wheat. PRICE (Dollars per ton)
Show the effects of the $60 tariff on the following graph. Use the black line (plus symbol) to indicate the world price plus the tariff. Then, use the green points (triangle symbols) to show the consumer surplus with the tariff and the purple triangle (diamond symbols) to show the producer surplus with the tariff. Lastly, use the orange quadrilateral (square symbols) to shade the area representing government revenue received from the tariff and the tan points (rectangle symbols) to shade the areas representing deadweight loss (DWL) caused by the tariff. Domestic Supply 490 Domestic Demand 460 World Price Plus Tariff 430 400 cs 370 340 310 PS 280 P. 250 Government Revenue 220 190 20 40 60 80 100 120 140 180 180 200 DWL QUANTITY (Tons of wheat) Complete the following table to summarize your results from the previous two graphs. Under Free Trade Under a Tariff PRICE (Dollars per ton)
Transcribed Image Text:Show the effects of the $60 tariff on the following graph. Use the black line (plus symbol) to indicate the world price plus the tariff. Then, use the green points (triangle symbols) to show the consumer surplus with the tariff and the purple triangle (diamond symbols) to show the producer surplus with the tariff. Lastly, use the orange quadrilateral (square symbols) to shade the area representing government revenue received from the tariff and the tan points (rectangle symbols) to shade the areas representing deadweight loss (DWL) caused by the tariff. Domestic Supply 490 Domestic Demand 460 World Price Plus Tariff 430 400 cs 370 340 310 PS 280 P. 250 Government Revenue 220 190 20 40 60 80 100 120 140 180 180 200 DWL QUANTITY (Tons of wheat) Complete the following table to summarize your results from the previous two graphs. Under Free Trade Under a Tariff PRICE (Dollars per ton)
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps with 2 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Unemployment
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:
9780190931919
Author:
NEWNAN
Publisher:
Oxford University Press
Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS