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The figure depicts a country attempting to use strategies to promote infant industry. The world price (PW) is at $3, and the proposed tariff is
The figure depicts a country attempting to use strategies to promote infant industry. The world price (PW) is at $3, and the proposed tariff is $3, bringing the effective Home price to $6 (PW+t).
a.In the figure, illustrate the deadweight loss as a result of the protective tariff, which moves the Home price from PWto PW+t. Place the shapeDW loss below Din the deadweight loss area below the demand curve, andDW loss below MCin the deadweight loss area below the marginal cost curve.
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