Economics

Using a diagram. What is the value of the gain to the domestic consumers due to the removal of the tariff in a large country?

  1. 👍
  2. 👎
  3. 👁
  1. Let me answer the small country case first (where the country has no impact on world prices). Then I'll expand the analysis to a large country.

    Draw a demand curve and a world price line (Pw). Now then assume there is a tarriff T. Final price paid by consumers is Pw+T = Pt. Draw this flat line. Where this line crosses demand give the equilibrium quantity.

    Now remove the tarrif. The new equilibrium Q is where Pw crosses the demand line. The increase to consumer surplus is area between Pw and Pt and below demand.

    Now then for a large country, with the removal of the tariff, the WORLD market will see an apparent increase in demand. World price will go up. So, on your graph, increase Pw to Pw' (Be sure Pw' is less than Pt).

    Take it from here.

    1. 👍
    2. 👎

Respond to this Question

First Name

Your Response

Similar Questions

  1. adding integers

    A stock lost 7 1/8 points on Monday and then another 1 7/8 points on Tuesday. On Wednesday, it gained 13 points. What was the net gain or loss of the stock for these three days? A) a loss of 22 points B) a gain of 4 points C) a

  2. SCIENCE

    Question 1 A) Which ecosystem is most resilient to change due to its high diversity?(1 point) coral reef stormwater pond mountain meadow arctic tundra Question 2 A) Use the image below to answer the question. The plants are eaten

  3. Science

    Which of the following describes how matter moves between producers, consumers, and decomposers in an ecosystem? one-way flow from producers to consumers to decomposers one-way flow from decomposers to consumers to producer cyclic

  4. chemistry

    Predict how many electrons will most likely be gained or lost by each of the following elements. (a) Se Will it gain or lose electrons? gain lose number of electrons (b) Cl Will it gain or lose electrons? gain lose number of

  1. Science, don't leave me hanging plz.

    1. Which of the following describes how matter moves between producers, consumers, and decomposers in an ecosystem? A. one-way flow from producers to consumers to decomposers. B. one-way flow from decomposers to consumers to

  2. Math

    A ship leaves port R sails to port S and then to port T. The bearing of S from R is 112. The Bearing of T from S is 033 The distance RT is 75 km and the distance RS is 56 km a) Draw a diagram showing the journey of the ship from R

  3. Statistics

    The mean cost of domestic airfares in the United States rose to an all-time high of $385 per ticket. Airfares were based on the total ticket value, which consisted of the price charged by the airlines plus any additional taxes and

  4. Economics

    As the aggregate price level falls, the number of domestic products purchased by foreigners will [rise], causing the quantity of domestic output demanded to [rise]. This is known as the [foreign purchases effect]. The first two

  1. history

    Which best describes a cause of US imperialism during the late 19th century? Military leaders believed that spending on warfare would encourage economic growth. Businesses made more goods than domestic consumers were able to buy.

  2. math

    In a survey of 120 consumers conducted in a shopping mall, 80 consumers indicated that they buy Brand A of a certain product, 68 buy Brand B, and 42 buy both brands. How many consumers participating the survey buy: a) At least one

  3. math

    from the top of a vertical mast 150m high,two huts on the same ground level are observed. One due east and the other due west of the mast. Their angles of depression are 60° and 45° respectively. Find the distance between the

  4. mathematics

    Four towns are situated in such a way that town Q is 500km on a bearing of 120º from P. Town R is 240km on a bearing of 210º from town P, while town S is due north of town Q and due east of town P. a) Draw a sketch diagram

You can view more similar questions or ask a new question.