Posted: March 6th, 2017
In the absence of trade, equilibrium is at point E, where D? and S? intersect, so that P? = $5 and Q?=400. With free trade at the world price of P? = $3m domestic consumers purchase AC=600X, of which AB=200X are produced domestically and BC=400X are imported, the tariff inclusive price will be $3(1+.33) = $4. What are the impacts of tariff on domestic consumption, domestic production, imports, and government s tariff revenue? Please show the numbers, for example, the domestic consumption will decrease from 600X to 500X.. What are the impacts of tariff on domestic consumption, domestic production, imports, and government s tariff revenue? Please show the numbers, for example, the domestic consumption will decrease from 600X to 500X.
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