The accompanying diagram illustrates the Canadian domestic demand curve and domestic supply curve for beef. The world price of beef is PW. Canada currently imposes an import tariff on beef, so the price of beef is PT. Parliament decides to eliminate the tariff. In terms of the areas marked in the diagram, answer the following questions. a. With the elimination

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The accompanying diagram illustrates the Canadian domestic demand curve and domestic supply curve for beef.

Price of beef Domestic supply P7 B: C:D A Pw Domestic demand Qs От Qт Qo Quantity of beef


The world price of beef is PW. Canada currently imposes an import tariff on beef, so the price of beef is PT. Parliament decides to eliminate the tariff. In terms of the areas marked in the diagram, answer the following questions.

a. With the elimination of the tariff what is the gain/loss in consumer surplus?

b. With the elimination of the tariff what is the gain/loss in producer surplus?

c. With the elimination of the tariff what is the gain/loss to the government?

d. With the elimination of the tariff what is the gain/loss to the economy as a whole?

Related Book For answer-question

Macroeconomics

3rd Canadian edition

Authors: Paul Krugman, Robin Wells, Iris Au, Jack Parkinson

ISBN: 978-1319120054