. Assume you are working for the US government. The president wants your department to study...

  

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. Assume you are working for the US government. The president wants your department to study the clothing market. The US governments need to raise revenues from the Clothing market, and you are assigned to study the cotton shirt market. You have access to the previous data: - If P = 20 then QQdd = 80. If P = 30 then QQdd = 70. - If P = 20 then QQss = 25. If P= 30 then QQss = 40. The US government needs at least 200 dollars of revenues raised from this market. If you raise more than that the government will accept the money but the president prefers you only raise that amount. So, make sure you do not make people pay too much unless you must. (The government revenue >= 200) a.) First you try to impose a tax. You consider imposing T dollars tax on each shirt being sold. You can impose this tax on buyers or the sellers. Which one do you prefer? How much will be the tax imposed on each shirt? How much will the consumer surplus and producer surplus in this market change after you introduce this tax? (10 points) b.) Now assume that the President just signed a free trade agreement with the Japanese prime minister. This means that the shirt market is operating under free trade now with the world price of 20 dollars. Instead of taxing the market now you can impose a tariff to raise revenues for the government without hurting the domestic producers. How much will be tariff you impose on foreign made shirts? How much will the consumer surplus and producer surplus change after you impose this tariff. (10 points) c.) Now that the shirt market is open to foreign producers as well, you can tax, impose a tariff or use a combination of both. What will you do? Each option has its own weaknesses and strengths. Provide an optimal policy for the US government to raise the needed revenues while minimizing the damage to the American consumers and producers. Defend your answer. (10 points) . Assume you are working for the US government. The president wants your department to study the clothing market. The US governments need to raise revenues from the Clothing market, and you are assigned to study the cotton shirt market. You have access to the previous data: - If P = 20 then QQdd = 80. If P = 30 then QQdd = 70. - If P = 20 then QQss = 25. If P= 30 then QQss = 40. The US government needs at least 200 dollars of revenues raised from this market. If you raise more than that the government will accept the money but the president prefers you only raise that amount. So, make sure you do not make people pay too much unless you must. (The government revenue >= 200) a.) First you try to impose a tax. You consider imposing T dollars tax on each shirt being sold. You can impose this tax on buyers or the sellers. Which one do you prefer? How much will be the tax imposed on each shirt? How much will the consumer surplus and producer surplus in this market change after you introduce this tax? (10 points) b.) Now assume that the President just signed a free trade agreement with the Japanese prime minister. This means that the shirt market is operating under free trade now with the world price of 20 dollars. Instead of taxing the market now you can impose a tariff to raise revenues for the government without hurting the domestic producers. How much will be tariff you impose on foreign made shirts? How much will the consumer surplus and producer surplus change after you impose this tariff. (10 points) c.) Now that the shirt market is open to foreign producers as well, you can tax, impose a tariff or use a combination of both. What will you do? Each option has its own weaknesses and strengths. Provide an optimal policy for the US government to raise the needed revenues while minimizing the damage to the American consumers and producers. Defend your answer. (10 points)

Answer rating: 100% (QA)

Given when P 20 P 30 a di 30units AD 70 units GS 95 ans Wsz Yo unita 8 7 PS Pria E 59 40 RO cs LO 20 ... View the full answer