Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Table 1 gives the effect of a tariff on cotton sweaters. (Assume there is no difference between domestically produced sweaters and foreign-produced sweaters.) Table 1

Table 1 gives the effect of a tariff on cotton sweaters. (Assume there is no difference between domestically produced sweaters and foreign-produced sweaters.) Table 1 Free Trade With a $4.00 Tariff World Price of sweaters Tariff per sweater Domestic Price of sweaters Sweaters consumed domestically (million sweaters/year) $42.00 0 $42.00 60 12 48 $42.00 $4.00 $46.00 52 18 Sweaters produced domestically (million sweaters/year) Sweaters imported (million packs/year 34 a) Using partial equilibrium analysis, estimate the amount domestic consumers lose from the tariff (give a dollar number). b) Estimate the net effect on the country's welfare as a result of the tariff (give a dollar number). c) Based on the information given in Table 1, would the optimum import tariff on sweaters be negative, zero, or positive? Why

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

Microeconomics Principles For A Changing World

Authors: Eric Chiang

4th Edition

1464186677, 978-1464186677

More Books

Students also viewed these Economics questions

Question

1. To understand how to set goals in a communication process

Answered: 1 week ago