Use Figure 1 and the following information to answer the question. Figure 1 shows the car market in Mexico when Mexico places no restriction on the quantity of cars imported. The world price of a car is $10,000.

If the government of Mexico introduces a $2,000 tariff on car imports, what will be the price of a car in Mexico, the quantity of cars produced in Mexico, the quantity imported into Mexico, and the government's tariff revenue?

Transcribed Image Text:

FIGURE 1 Price (thousands of dollars per car) 18 16 14+ 12+ 10 0 S X D 2 6 8 10 12 14 Quantity (millions of cars per year) FIGURE 1 Price (thousands of dollars per car) 18 16 14+ 12+ 10 0 S X D 2 6 8 10 12 14 Quantity (millions of cars per year)

Answer rating: 100% (QA)

Here as know that the demand means ability to pay with desire and supply means number of goods produ... View the full answer