O ng.cengage.com C B Grades - S21-Macroeco... Course Hero Cengage Learning MindTap - Cengage Lea.. 6 . Effects of a tariff Su. C Assume The Following... G 6 . Effects of a tariff Su.. CENGAGE |MINDTAP Q Search this course ? .Sarthak v Assignment 2 X 6 . Effects of a tariff Suppose the following graph shows the domestic demand (D) and domestic supply (S) for cheese in Algeria, which is a producer as well as an importer of cheese. The free trade world price of cheese (Pw ) is $1,000 per tonne. A-Z O 2800 -+ 2600 2400 Price with Tariff 2200 2000 Tariff Revenue 1800 bongo S D 1600 PRICE/COST (Dollars per tonne) 1400 Change in PS 1200 PW 1000 800 DWL 600 400 0 1 2 3 4 5 6 7 8 9 10 11 12 QUANTITY (Millions of tonnes)Si\" = l U ngcengagecom Cl l o . if] i lill ':'.' CENGAGE MINDTAP Q Search this course 0 : Sarthak v Assignment 2 0123456789101112 QUANTITY (Millions of tonnes) With free trade, the price of cheese in Algeria would be $7 , , , per tonne. Algeria would produce , , , million tonnes of cheese and import million tonnes. Suppose Algeria's government imposes a 60% tariff on cheese imports. Assume the tariff does not influence the world price of cheese. On the preceding graph, use the black line (plus symbol) to show the world supply of cheese with the tariff. The tariff V Algeria's production of cheese by million tonnes, v its domestic consumption by million tonnes, and v its imports by lmillion tonnes. On the preceding graph, use the green quadrilateral (triangle symbols) to shade the area that represents tariff revenue. Then use the purple point (diamond symbol) to shade the area that represents the change in the producer surplus resulting from the tariff. Finally, use the black points to shade the area, or areas if there are more than one on the graph, that together represent the deadweight loss resulting from the tariff. Note: Select and drag a ll area point from the palette to the graph. To ll in regions on the graph, merely drop the ll area point on the desired region. l l l = l U Bngcengage'com 0' ': CENGAGE MINDTAP Q Search this course n e I Assignment 2 On the preceding graph, use the green quadrilateral (triangle symbols) to shade the area that represents tariff revenue. Then use the purple point (diamond symbol) to shade the area that represents the change in the producer surplus resulting from the tariff. Finally, use the black points to shade the area, or areas if there are more than one on the graph, that together represent the deadweight loss resulting from the tariff. Note: Select and drag a ll area point from the palette to the graph. To ll in regions on the graph, merely drop the ll area point on the desired region. Fill in the blank cells in the following table to summarize the effects of the tariff on Algeria '5 welfare. (Hint: The area of each shaded region on the graph can be found by clicking on the polygon.) Amount of Change Change In... Gain or Loss (Millions of dollars) Ta riff revenue v Producer surplus V Consumer surplus _' Change in total welfare v Grade It Now Save & Continue Continue without saving
