Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Suppose that, in the market for apples, domestic demand is given by P = 30 - 0.5Q, and domestic supply is given by P =

Suppose that, in the market for apples, domestic demand is given by P = 30 - 0.5Q, and domestic supply is given by P = 1.5Q, where Q represents tonnes of apples. Further suppose that the world price of apples is $6 per tonne.

A. On a graph, illustrate the market equilibrium if the market is open to international trade. Calculate the gains from trade in this market and label the corresponding area on the graph.

B. Suppose that the government is considering imposing a tariff of $4 per tonne on imported apples. Calculate the deadweight loss associated with the tariff.

C. A representative of the Australian apple growers' industry association is recommending that the government proceed with the tariff, saying the following: "A tariff will be a win-win for the government. It will raise government revenue and create jobs at the same time." Explain whether you agree with the representative's assessment and whether you would recommend imposing the tariff.

Note= Please draw the graph on a piece of paper and attach.

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

Energy, Trade And Finance In Asia A Political And Economic Analysis

Authors: Justin Dargin, Tai Wei Lim

1st Edition

1317322711, 9781317322719

More Books

Students also viewed these Economics questions

Question

=+d) Why does the no trend model from Exercise 40 no longer work?

Answered: 1 week ago