1. Effects of Tariff.docxOn the basis of the attached diagram that reflects the effect of imposing a tariff on an importable product. Identify these effects on the diagram and complete the following table:

EFFECTSCALCULATIONSANSWER

1.Consumption Effect

2ProductionEffect

3RevenueEffect

4Inefficiency of Tariff (dead weight loss)

5Change in Consumer Surplus

6Producer Surplus before Trade

7Change in Producer Surplus

Please note: Area of a triangle = 1\2(base x height) = 1\2bh; Area of rectangle =length x width =LW

1. Suppose that under free trade a final good F has a price of $1,000 and that the prices of two inputs,A and B, used in the productionof F are P_{A= $300 and}P_{B= 500 and that one unit each of A and B is used in producing one unit of F. Suppose also that a tariff of 20 percent}is placed on good F, while imported inputs had tariffs of 20 percent and 30 percent respectively. Calculate the effective rate of tariff protection for domesticindustryproducing good F and interpret the meaning of your result ( All steps mustbe shown to obtain full credit). Note: v = value added without tariff and v' = value added with tariff.