Suppose there is a free trade regime, and world price of grain is quite lower than...
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Suppose there is a free trade regime, and world price of grain is quite lower than the domestic price in Homeland. Then, in response for farmers' complaints, Homeland's government decides to impose a tariff for imported grain. a. What will be the impact of the tariff on consumers' and producers' welfare? Justify your answer on a diagram. b. Does government gain any revenue by imposing the tariff? Is there any welfare loss? Justify your answer on a separate diagram. Suppose there is a free trade regime, and world price of grain is quite lower than the domestic price in Homeland. Then, in response for farmers' complaints, Homeland's government decides to impose a tariff for imported grain. a. What will be the impact of the tariff on consumers' and producers' welfare? Justify your answer on a diagram. b. Does government gain any revenue by imposing the tariff? Is there any welfare loss? Justify your answer on a separate diagram.
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In some circumstances the government believes that the free market equilibrium price is too high If there is political pressure to act a government ca... View the full answer
Related Book For
International Economics Theory and Policy
ISBN: 978-0273754206
9th Edition
Authors: Paul R. Krugman, Maurice Obstfeld, Marc J. Melitz
Posted Date:
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