A small country has a straight-line, upward-sloping domestic supply curve and a straight-line, downward-sloping domestic demand curve
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A small country has a straight-line, upward-sloping domestic supply curve and a straight-line, downward-sloping domestic demand curve for one of its key export products. The world price for this product is \($150\) per ton. The country currently has an export tax of \($10\) per unit, and it exports 10 million tons per year.
The country’s government is considering reducing its export tax to \($5\) per ton , and it asks you to determine if this will reduce by half the inefficiency caused by the export tax. Use a graph to conduct your analysis and provide your response.
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