Effect of before tariff and after tariff on price

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Consider the market for fresh produce in Snowland. Fresh produce is produced expensively in hothouses in Snowland. It can also be imported much more cheaply on the world market. Snowland is a "small country" in the fresh produce market: what it does has no effect on the world price of fresh produce.

Fresh produce improves the long-term health of Snowlanders. However, because they have government-provided health care, Snowlanders do not consider the health care treatment cost implications of poor health when making decisions about purchasing fresh produce.

In a new diagram, show the new price and quantity and any changes in CS, PS, Govt Revenue, External Benefits (or costs) and SS that would come if the tariff were eliminated. (So the diagram must show both with tariff (before) and without tariff (after).)

Reference no: EM1317258

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