ECON MICRO
5th Edition
ISBN: 9781337000536
Author: William A. McEachern
Publisher: Cengage Learning
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Question
Chapter 17, Problem 3.8P
To determine
To list out the 4 laws enacted by the US government to protect the environment
Concept Introduction:
The rules and regulations put in force by the government to protect the natural resources from getting polluted and exhausted is known as the Environment Protection Act. The primary intention of the government is to reduce pollution and consumption of non-renewable resources and conserve them for prolonged use.
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PROBLEM (5) (tariff) The domestic (US) demand and supply for soy is p = 80 - Qp and p = Qs+ 10
respectively. US market is very small relative to the world market, and the world (equilibrium) price is
$20. Draw one graph for the market marking all intercepts and intersections to help you with (a) and (b)
below.
(a) If there is NO trade, what is the CS, PS, net domestic benefits, DWL?
(b) If there is free trade, what is the CS, PS, net domestic benefits, DWL? How many units are imported?
Now the state imposes a tariff of t dollars per unit.
(c) What should be the tariff amount t to maximize tariff revenues? In this case, what is the DWL?
(d) What should be the tariff amount t so that consumers and producers equally well off (CS equals PS)?
(e) What should be the tariff amount t to maximize PS?
(f) What is the most efficient tariff amount t? What is the least efficient tariff amount t? (i.e. that minimizes
and maximizes DWL respectively.)
7
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