Consider a market for printers. The equilibrium price and quantity before trade is $310 and 125 respectively. If the quantity is zero sellers would charge $160 and buyers would pay $460. Suppose that the world price for printers is $250 which leads to domestic quantity demanded of 175 and domestic quantity supplied of 75. The domestic government decides to impose a tariff of $30 which reduces domestic quantity demanded by 25 and increases domestic quantity supplied by 25. Calculate the net effect of tariff on total welfare.

Answer rating: 100% (QA)

To calculate the net effect of the tariff on total welfare we need to consider changes in consumer s... View the full answer