What is the effect of this tariff on the affected parties

Assignment Help Business Economics

Reference no: EM131169324

At the international price of $20/unit, domestic production is 5,000 units and domestic consumption is 6,000 units. With a 20 percent tariff, domestic production increases by 20 percent and domestic consumption decreases by 25 percent. What is the effect of this tariff on the affected parties? What is the net welfare effect on the country as a whole?

Reference no: EM131169324

Questions Cloud

Suppose that the minimum required reserve ratio for banks : Suppose that the minimum required reserve ratio for banks was 1/11. Also suppose that banks held no excess reserves and that currency in circulation was unchanged. What action in the Treasury bill market would the Fed have to take to increase bank ch..

Find the consumer consumption the first and second period : In the consumption savings model, suppose that we have a representative consumer and his utility is given by U(c, c') = min {c, βc'} The budget constraint for the consumer is c + s = y - t second period budget constraint is c'= y' - t' + (1 + r)s. Fi..

About the school safety : Why is the system set up in a way that things like campus shooting even occur in the first place? What precautions should be set up to make sure guns fall into the right hands?

Domestic import-competing producers : “While the imposition by a country’s government of an import tariff on a good clearly injures the country’s domestic consumers of the good, the tariff helps domestic import-competing producers and enhances overall country welfare (i.e., the “net welf..

What is the effect of this tariff on the affected parties : At the international price of $20/unit, domestic production is 5,000 units and domestic consumption is 6,000 units. With a 20 percent tariff, domestic production increases by 20 percent and domestic consumption decreases by 25 percent. What is the ef..

Compute the exchange rate : If we know the exchange rate between Country A’s currency and Country B’s currency, and we know the exchange rate between Country B’s currency and Country C’s currency, then we can compute the exchange rate between Country A’s currency and Country C’..

Explain reaction function diagram for the two firms : Assume that there are only two firms in an industry – a home firm and a foreign firm – and that the firms are competing in third-country markets. Explain a “reaction function diagram” for the two firms, including the definition of a “reaction functio..

Explain why arbitrage opportunity exists : Molson’s Beer is produced in Canada and sold in many countries. In the province of Ontario a six-pack of Molson’s beer sold for $8.00 Canadian. Across the border in Buffalo, NY a six-pack of the same beer was for sale for $6.00 US. How much would it ..

Terms of both fiscal policy and monetary policy : Identify the policy options for dealing with a recession and inflation respectively in terms of both fiscal policy and monetary policy and the respective schools of thought associated with them. Beginning from a state of equilibrium in the aggregate ..

User Account

All Pages