What is the effect of a tariff on consumer and producer surplus? Under which conditions is protectionism advisable? Discuss with reference to at least one case study and examine distributional consequences.
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- A large or small country imposing a tariff can benefit in terms of social welfare?Using demand and supply diagrams explain the major welfare differences between tariff and quotas?China placed tariffs on the importation of US soybeans. Assume that the domestic market for soybeans in China is described by the following equations: Demand: P = 11.5 – Q Supply: P = 5.5 + Q Price is in 10 Yuan (¥) per bushel of soybeans and the units for Quantity are 100 million bushels per year. This is to make graphing simpler. This does NOT mean that the price is 10 and quantity is 100. Rather it means that if the price was 40¥ and the quantity was 7,500,000,000 bushels, this would plot as 4 and 7.5 respectively. The world price for soybeans is ¥65/bushel (this would graph as a horizontal line at 6.5). Graph the soybean market in China showing equilibrium both with no barriers to trade and with a ¥15/bushel tariff. Be sure to fully and clearly label the graph including: Domestic Demand curve (D), Domestic Supply curve (S), the World Price (WP), and the Price with tariffs (PT), along with the quantities imported both with and without the tariff. Based on your graph, what…
- Imposition of an import tariff leads to Group of answer choices reduction in consumer surplus deadweight loss efficiency loss All of these are trueHome's demand curve for wheat is P = 10 - (1/20)Qd. Its supply curve is P = 4+ (1/20)Qs Foreign's demand curve for wheat is P * = 8 - (1/20) Qd* Its supply curve is P* = 2+(1/20)Qs* Determine the effect of the tariff on Home import-competing producers APS = Home consumers ACS = Home government tariff revenue AGR= Adding these effects together AWAPS + ACS + AGR =To determine: The impact of export subsidy.
- The aim of a tariff is to: (a) maximise total surplus. (b) protect domestic consumers. (c) protect domestic producers. (d) create deadweight loss.One advantage of a tariff over a quota, from the perspective of the nation imposing it, is that a tariff decreases the domestic price increases the quantity of imports decreases the quality of imports raises tax revenueHome's demand curve for wheat is P = 10 - (1/20)Qd. Its supply curve is P = 4 + (1/20)Qs Eoreign's demand curve for wheat is P * = 8 - (1/20)Qd* Its supply curve is P* = 2+(1/20)Qs* Determine the effect of the tariff on Home import-competing producers APS = Home consumers ACS = Home government tariff revenue AGR = Adding these effects together AW = APS + ACS + AGR =