Question
Q1 : Suppose a large country A initially imposed a tariff on its imports from the rest of the world and is now considering removing
Q1 : Suppose a large country A initially imposed a tariff on its imports from the rest of the world and is now considering removing its tariff. Use a domestic-market graph to
(a)show the effect of country A's tariff removal on the world's price, country A's import price, import quantity, consumer surplus, producer surplus, and government revenue.
(b)identify country A's net welfare change as a result of its tariff removal. Is country A unambiguously better off?
(c)How will foreign producers be affected by country A's tariff removal?
(d)What factor determines the level of optimal tariff for country A?
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