Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Could you help me with the following questions on tariffs and elasticity? Exercise 1: Tariffs and Elasticity A country imports 5 billion tonnes of coal

Could you help me with the following questions on tariffs and elasticity?

image text in transcribed
Exercise 1: Tariffs and Elasticity A country imports 5 billion tonnes of coal per year and domestically produces another 4.5 billion tonnes of coal per year. The world price of coal is $50 per tonne. Assuming linear schedules, economists estimate the price elasticity of domestic supply to be 0.3 and the price elasticity of domestic demand to be 0.2 at the current equilibrium. Consider the changes in social surplus that would result from imposition of a $20 per tonne import fee on coal that would involve annual administrative costs of $125 million. Assume that the world price will not change as a result of the country imposing the import fee, but that the domestic price will increase by $20 per tonne. Assume national standing. Calculate the following: (a) Quantity consumed after the imposition of the import fee. (b) Quantity produced after the imposition of the import fee. (c) Quantity imported after the imposition of the import fee. (d) Estimate the annual social net benefits of the import fee

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Economics A Problem-Solving Approach

Authors: Luke M. Froeb, Brain T. Mccann

2nd Edition

B00BTM8FK0

More Books

Students also viewed these Economics questions

Question

Which year had the best Monday sales?

Answered: 1 week ago