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Consider a trade policy that would enact an export tariff. That is, the government would impose a fine, on each unit of a good exported.
Consider a trade policy that would enact an "export tariff". That is, the government would impose a fine, on each unit of a good exported.
a) Demonstrate the change in exports due to this export tariff for a small open economy.
b) Re-draw your graph from part a) and demonstrate the change in consumer surplus and producer surplus due to the export tariff
c) Re-draw your graph from part a) and demonstrate the tariff revenue collected. Indicate the area that represents change in total surplus due to the export tariff, relative to free trade
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