15.10 In our analysis of tariffs we assumed that the country in question faced a perfectly elastic...
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15.10 In our analysis of tariffs we assumed that the country in question faced a perfectly elastic supply curve for imports. Now assume this country faces a positively sloped supply curve for imported goods.
a. Show graphically how the level of imports will be determined.
b. Use your graph from part
(a) to demonstrate the effects of a tariff in this market.
c. Carefully identify the sources of the various changes in consumer and producer surplus that are brought about by the tariff in part (b).
d. Show how the deadweight losses brought about by the tariff in this case will depend on the elasticity of demand and the elasticities of supply of domestic and imported goods.
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Related Book For
Microeconomic Theory Basic Principles And Extensions
ISBN: 9780324270860
9th Edition
Authors: Walter Nicholson
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