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Suppose that the world price is reduced by $50 after the U.S. imposes a $100 tariff. The table above is now: Situation without Tariff Situation
Suppose that the world price is reduced by $50 after the U.S. imposes a $100 tariff. The table above is now: Situation without Tariff Situation with Tariff World Price $600 per tonne $550 Tariff 0 $100 per tonne U.S. Price $600 per tonne $650 per tonne U.S. Consumption (million tonnes) 50 45 U.S. Production (million tonnes) 10 15 Imports (million tonnes) 40 30 7. In this new scenario, what is consumers' (importers') loss from a tariff and what is producers' gain from a tariff? 8. What is government revenue from the tariff and what is the net welfare effect on U.S. well-being from the tariff? 9. How does your answer compare to (d.)? Do you think it's reasonable to expect that the world price would decline by $50 if a $100 tariff was imposed in the U.S
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