ueio uit wUIIu piice ainu uit WUI ru suppiy CuIve CIILCIcu as a TIUIILUIILGI Ie. vve oaw that a tariff imposed on an open market will lead to a deadweight loss. Let's explore what happens if we relax our assumption that the domestic market cannot influence the world price. st Suppose the domestic market is operating under an open trade policy and faces an upward-sloping world supply curve. In the figure on the right, this initial world supply is depicted as S'. Now consider the impact of a tariff that moves supply from S' to S'. 1.) Using the point drawing tool, indicate the price domestic consumers pay and the quantity they consume before the tariff. Label this point 'e,. 2.) Using the point drawing tool, indicate the price domestic consumers pay and the quantity they consume with the tariff. Label this point 'e, 3.) Using the rectangle drawing tool and the triangle drawing tool each once, shade in the change in consumer surplus (CS cs Triangle CS Rectangle or CS- Triangle) as Rectangle a result of the tarif. D 4.) Using the rectangle drawing tool, shade in the new government revenue. Label this 'Government revenue." Q. Units of output Attach the appropriate provided labels, where "+" indicates a positive change and "- indicates a negative change. Carefully follow the instructions above and only draw the required objects. P. $ per unit
ueio uit wUIIu piice ainu uit WUI ru suppiy CuIve CIILCIcu as a TIUIILUIILGI Ie. vve oaw that a tariff imposed on an open market will lead to a deadweight loss. Let's explore what happens if we relax our assumption that the domestic market cannot influence the world price. st Suppose the domestic market is operating under an open trade policy and faces an upward-sloping world supply curve. In the figure on the right, this initial world supply is depicted as S'. Now consider the impact of a tariff that moves supply from S' to S'. 1.) Using the point drawing tool, indicate the price domestic consumers pay and the quantity they consume before the tariff. Label this point 'e,. 2.) Using the point drawing tool, indicate the price domestic consumers pay and the quantity they consume with the tariff. Label this point 'e, 3.) Using the rectangle drawing tool and the triangle drawing tool each once, shade in the change in consumer surplus (CS cs Triangle CS Rectangle or CS- Triangle) as Rectangle a result of the tarif. D 4.) Using the rectangle drawing tool, shade in the new government revenue. Label this 'Government revenue." Q. Units of output Attach the appropriate provided labels, where "+" indicates a positive change and "- indicates a negative change. Carefully follow the instructions above and only draw the required objects. P. $ per unit
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:that a tariff imposed on an open market will lead to a deadweight loss. Let's explore what
happens if we relax our assumption that the domestic market cannot influence the world
price.
st
Suppose the domestic market is operating under an open trade policy and faces an
upward-sloping world supply curve. In the figure on the right, this initial world supply is
depicted as S'. Now consider the impact of a tariff that moves supply from S' to S'.
1.) Using the point drawing tool, indicate the price domestic consumers pay and the
quantity they consume before the tariff. Label this point 'e,.
2.) Using the point drawing tool, indicate the price domestic consumers pay and the
quantity they consume with the tariff. Label this point 'e,
3.) Using the rectangle drawing tool and the triangle drawing tool each once, shade in
the change in consumer surplus (CS
or CS.
Triangle) as
Rectangle
Triangle CSRectangle
Cs,
a result of the tariff.
D
4.) Using the rectangle drawing tool, shade in the new government revenue. Label this
'Government revenue."
Q. Units of output
Attach the appropriate provided labels, where"+" indicates a positive change and "-
indicates a negative change.
Carefully follow the instructions above and only draw the required objects.
p. $ per unit
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