Chapter 8, Problem 7P

To determine

To determine:-

a) The diagram indicating US domestic supply curve and domestic demand curve.

b) The number of oranges imported or exported by the United States with free trade.

c) The oranges imported or exported by the United States with the introduction of a tariff of $0.20 per orange

d) Shade the gain or loss to the economy as a whole from the introduction of the tariff.

Concept Introduction:-

Free trade is encouraged by organizations like WTO to monitor the trade policies. It increases trade between the countries as well as promotes economic growth. Reducing trade barriers increases trade, and lowers prices for consumers.

Supply and demand are the backbone of a market economy. The price of a product or good is determined by the supply and demand. The higher the price the less is the demand whereas higher the price, higher is the supply. The demand curve shows a downward slope whereas the supply curve shows an upward slope.