The graph below depicts the impact of a tariff in the market for shoes. If a nation initially participates in free trade and enjoys a price of $100 per pair of shoes, then a 20% shoe tariff would reduce the welfare of domestic consumers by the total of areas A, B, PS, and T. Of these areas representing a loss to domestic consumers, click on the area(s) that would become a gain to foreign producers if the tariff were replaced with a quota for the same quantity of imports. Tariff Price Po $140 P₁-$120 P-$100 PS Click or tap the appropriate place in the image. Que Imports with a tariff Q₂ Imports without Soomestic only Sthan Domestic Sper trade Quantity (shoes)

The graph below depicts the impact of a tariff in the market for shoes. If a nation initially participates in free trade and enjoys a price of $100 per pair of shoes, then a 20% shoe tariff would reduce the welfare of domestic consumers by the total of areas A, B, PS, and T. Of these areas representing a loss to domestic consumers, click on the area(s) that would become a gain to foreign producers if the tariff were replaced with a quota for the same quantity of imports. Tariff Price Po $140 P₁-$120 P-$100 PS Click or tap the appropriate place in the image. Que Imports with a tariff Q₂ Imports without Soomestic only Sthan Domestic Sper trade Quantity (shoes)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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In South Korea's state-led industrialization, export subsidies allowed South Korean products (from Samsung, Hyundai) to be sold all over the world. Compare and contrast export subsidies to import tariffs. Which factor might lead a country to decide on one or the other?
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Consider two countries, Home and Foreign. In the figure below, the import demand ("IDHome") curve depicts Home's demand for Foreign's flash drives, and the import supply curve ("ISForeign") depicts Foreign's supply of flash drives to Home. Assume Home is a "large" country that levies a tariff against Foreign imports of flash drives, thereby shifting the relevant supply curve from ISForeign to ISForeign +t. For the following questions, please refer to the figure below. P $30 28 26 24 22 20 18 16 15-- 14 12 10 8 6 4 2 0 2 4 ISForeign +t 6 8 10 12 14 16 18 20 22 22 24 26 28 ISForeign IDHome 30 Q With free trade, Home's consumer surplus equals $112.50 and Foreign's producer surplus equals $112.50. With a tariff of $ 12 per flash drive, Home's consumer surplus equals $72, Foreign's producer surplus equals $ 36, Home's tariff revenue equals $72, and Home's deadweight loss equals $45. Of the Home's tariff revenue, $36 comes from Foreign's producers, and the rest comes from Home's consumers.…
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