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During the COVID-19 pandemic, policymakers were concerned about the availability and delivery of personal protective equipment (PPE), e.g. face- masks, to Norway. A policymaker

 

During the COVID-19 pandemic, policymakers were concerned about the availability and delivery of personal protective equipment (PPE), e.g. face- masks, to Norway. A policymaker suggests that we should produce more PPE ourselves, and that we should use tariffs on PPE to protect the domestic market and encourage domestic production. a) Analyze the market for PPE in partial equilibrium, before the tariff is introduced. Derive the import demand curve for Norway and the export supply curve for the rest of the world (ROW). Assume that Norway is initially a net importer of PPE. b) Analyze the impact of a PPE tariff on domestic production, consump- tion and prices. c) Analyze the impact of a PPE tariff on producer and consumer surplus as well as overall welfare for Norway. Discuss the role of terms of trade in this context. d) Is the economic analysis above sufficient to analyze the problem? Are there factors outside the model that also need to be considered? Discuss briefly. Your answers should be accompanied by either figures or math (or both).

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aThe market for PPE in partial equilibrium before the tariff is introduced The import demand curve for Norway and the export supply curve for the rest of the world ROW can be derived by analyzing the ... blur-text-image

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