Explain how a tariff reduction causes an Increase in the equilibrium quantity of imports and a decrease in the equilibrium price . Hint: Consider the Work It Out “Effects of Trade Barriers.”

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Answer 1

Textbook Question

Chapter 21, Problem 1SCQ

Explain how a tariff reduction causes an Increase in the equilibrium quantity of imports and a decrease in the equilibrium price. Hint: Consider the Work It Out “Effects of Trade Barriers.”

Expert Solution & Answer

To determine

The way Tariff reduction leads to a decrease in the equilibrium price and an increase in the equilibrium quantity of imports is to be determined.

Explanation of Solution

As a tariff isdefined as a tax which is imposed by the government on the goods and services that are imported from some other country. It leads to an increase in the price of those goods and services and thus makes those good and services less attractive and makes the imports of goods and services less desirable by the consumers.

So, this is just the reverse or we could say opposite of the work it out feature. As if the tariff the reduced, it will lead to a decrease in the cost of production. Which will be shown by a rightward or we can say a downward shift in the supply curve.

As the tariff is reduced now more quantity will be demanded as the rates are reduced as te cost of production will reduce. So the equilibrium quantity will increase and the equilibrium price will decrease.

Economics Concept Introduction

Tariff: is defined as a tax which is imposed by the government on the goods and services that are imported from some other country. It leads to an increase in the price of those goods and services and thus makes those good and services less attractive and makes the imports of goods and services less desirable by the consumers.

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Short Description Fiscal Policy Graph Details Shown is a Fiscal Policy diagram with the variable Real GDP (billions of dollars) on the x-axis and the variable Price Level on the y-axis. The x-axis is scaled from 0 to 800 billion dollars with an increment of 40 billion dollars, and the y-axis is scaled from 30 to 150 units with an increment of 5 units. Object Details On the graph we have:Four Line Objects:An upward sloping Aggregate Supply, AS line with two endpoints:Point 1 at (160, 70)Point 2 at (720, 140)A downward sloping Aggregate Demand, AD1 line with two endpoints:Point 1 at (80, 110)Point 2 at (640, 40)A vertical Long-run Aggregate Supply, LRAS with two endpoints:Point 1 at (400, 145)Point 2 at (400, 30)A downward sloping Aggregate Demand, AD line with two endpoints:Point 1 at (720, 60)Point 2 at (160, 130)Two Reference Points:Lines AS, AD, and LRAS intersect at (400, 100)Lines AS and AD1 intersect at (280, 85) a. How much does aggregate demand need to change to restore the…

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a. How much does aggregate demand need to change to restore the economy to its long-run equilibrium? $ billion b. If the MPC is 0.6, how much does government purchases need to change to shift aggregate demand by the amount you found in part a? $ billion Suppose instead that the MPC is 0.95. c. How much does aggregate demand and government purchases need to change to restore the economy to its long-run equilibrium? Aggregate demand needs to change by $ billion and government purchases need to change by $ billion.

Answer 2

Textbook Question

Chapter 21, Problem 1SCQ

Explain how a tariff reduction causes an Increase in the equilibrium quantity of imports and a decrease in the equilibrium price. Hint: Consider the Work It Out “Effects of Trade Barriers.”

Expert Solution & Answer

To determine

The way Tariff reduction leads to a decrease in the equilibrium price and an increase in the equilibrium quantity of imports is to be determined.

Explanation of Solution

As a tariff isdefined as a tax which is imposed by the government on the goods and services that are imported from some other country. It leads to an increase in the price of those goods and services and thus makes those good and services less attractive and makes the imports of goods and services less desirable by the consumers.

So, this is just the reverse or we could say opposite of the work it out feature. As if the tariff the reduced, it will lead to a decrease in the cost of production. Which will be shown by a rightward or we can say a downward shift in the supply curve.

As the tariff is reduced now more quantity will be demanded as the rates are reduced as te cost of production will reduce. So the equilibrium quantity will increase and the equilibrium price will decrease.

Economics Concept Introduction

Tariff: is defined as a tax which is imposed by the government on the goods and services that are imported from some other country. It leads to an increase in the price of those goods and services and thus makes those good and services less attractive and makes the imports of goods and services less desirable by the consumers.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Textbook Question

Chapter 21, Problem 1SCQ

Explain how a tariff reduction causes an Increase in the equilibrium quantity of imports and a decrease in the equilibrium price. Hint: Consider the Work It Out “Effects of Trade Barriers.”

Expert Solution & Answer

To determine

The way Tariff reduction leads to a decrease in the equilibrium price and an increase in the equilibrium quantity of imports is to be determined.

Explanation of Solution

As a tariff isdefined as a tax which is imposed by the government on the goods and services that are imported from some other country. It leads to an increase in the price of those goods and services and thus makes those good and services less attractive and makes the imports of goods and services less desirable by the consumers.

So, this is just the reverse or we could say opposite of the work it out feature. As if the tariff the reduced, it will lead to a decrease in the cost of production. Which will be shown by a rightward or we can say a downward shift in the supply curve.

As the tariff is reduced now more quantity will be demanded as the rates are reduced as te cost of production will reduce. So the equilibrium quantity will increase and the equilibrium price will decrease.

Economics Concept Introduction

Tariff: is defined as a tax which is imposed by the government on the goods and services that are imported from some other country. It leads to an increase in the price of those goods and services and thus makes those good and services less attractive and makes the imports of goods and services less desirable by the consumers.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Textbook Question

Chapter 21, Problem 1SCQ

Explain how a tariff reduction causes an Increase in the equilibrium quantity of imports and a decrease in the equilibrium price. Hint: Consider the Work It Out “Effects of Trade Barriers.”

Expert Solution & Answer

To determine

The way Tariff reduction leads to a decrease in the equilibrium price and an increase in the equilibrium quantity of imports is to be determined.

Explanation of Solution

As a tariff isdefined as a tax which is imposed by the government on the goods and services that are imported from some other country. It leads to an increase in the price of those goods and services and thus makes those good and services less attractive and makes the imports of goods and services less desirable by the consumers.

So, this is just the reverse or we could say opposite of the work it out feature. As if the tariff the reduced, it will lead to a decrease in the cost of production. Which will be shown by a rightward or we can say a downward shift in the supply curve.

As the tariff is reduced now more quantity will be demanded as the rates are reduced as te cost of production will reduce. So the equilibrium quantity will increase and the equilibrium price will decrease.

Economics Concept Introduction

Tariff: is defined as a tax which is imposed by the government on the goods and services that are imported from some other country. It leads to an increase in the price of those goods and services and thus makes those good and services less attractive and makes the imports of goods and services less desirable by the consumers.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

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Answer 6

Textbook Question

Answer 7

Expert Solution & Answer

To determine

The way Tariff reduction leads to a decrease in the equilibrium price and an increase in the equilibrium quantity of imports is to be determined.

Explanation of Solution

As a tariff isdefined as a tax which is imposed by the government on the goods and services that are imported from some other country. It leads to an increase in the price of those goods and services and thus makes those good and services less attractive and makes the imports of goods and services less desirable by the consumers.

So, this is just the reverse or we could say opposite of the work it out feature. As if the tariff the reduced, it will lead to a decrease in the cost of production. Which will be shown by a rightward or we can say a downward shift in the supply curve.

As the tariff is reduced now more quantity will be demanded as the rates are reduced as te cost of production will reduce. So the equilibrium quantity will increase and the equilibrium price will decrease.

Economics Concept Introduction

Tariff: is defined as a tax which is imposed by the government on the goods and services that are imported from some other country. It leads to an increase in the price of those goods and services and thus makes those good and services less attractive and makes the imports of goods and services less desirable by the consumers.

Answer 8

Expert Solution & Answer

To determine

The way Tariff reduction leads to a decrease in the equilibrium price and an increase in the equilibrium quantity of imports is to be determined.

Explanation of Solution

As a tariff isdefined as a tax which is imposed by the government on the goods and services that are imported from some other country. It leads to an increase in the price of those goods and services and thus makes those good and services less attractive and makes the imports of goods and services less desirable by the consumers.

So, this is just the reverse or we could say opposite of the work it out feature. As if the tariff the reduced, it will lead to a decrease in the cost of production. Which will be shown by a rightward or we can say a downward shift in the supply curve.

As the tariff is reduced now more quantity will be demanded as the rates are reduced as te cost of production will reduce. So the equilibrium quantity will increase and the equilibrium price will decrease.

Economics Concept Introduction

Tariff: is defined as a tax which is imposed by the government on the goods and services that are imported from some other country. It leads to an increase in the price of those goods and services and thus makes those good and services less attractive and makes the imports of goods and services less desirable by the consumers.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

To determine

The way Tariff reduction leads to a decrease in the equilibrium price and an increase in the equilibrium quantity of imports is to be determined.

Answer 12

Explanation of Solution

As a tariff isdefined as a tax which is imposed by the government on the goods and services that are imported from some other country. It leads to an increase in the price of those goods and services and thus makes those good and services less attractive and makes the imports of goods and services less desirable by the consumers.

So, this is just the reverse or we could say opposite of the work it out feature. As if the tariff the reduced, it will lead to a decrease in the cost of production. Which will be shown by a rightward or we can say a downward shift in the supply curve.

As the tariff is reduced now more quantity will be demanded as the rates are reduced as te cost of production will reduce. So the equilibrium quantity will increase and the equilibrium price will decrease.

Answer 13

Economics Concept Introduction

Tariff: is defined as a tax which is imposed by the government on the goods and services that are imported from some other country. It leads to an increase in the price of those goods and services and thus makes those good and services less attractive and makes the imports of goods and services less desirable by the consumers.

Answer 14

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Explain how a tariff reduction causes an Increase in the equilibrium quantity of imports and a decrease in the equilibrium price . Hint: Consider the Work It Out “Effects of Trade Barriers.”

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