Malaysian government has imposed import tariffs on imported photocopy machine from China to protect their local industry
Question:
Malaysian government has imposed import tariffs on imported photocopy machine from China to protect their local industry from foreign competition. Given are the two equations of domestic demand and supply of photocopy machine in Malaysia:
Demand: Qd= 135 - 5P
Supply: Qs= 15 + 15P
where Q denotes quantity (in thousand units) and P denotes price (in RM thousand per unit).
i) If the world price is RM5 thousands per unit and import tariff of 10% is imposed, determine the change in imports of photocopy machine after tariff? (8 marks)
ii) What is the effect of this import tariff on Malaysian consumers and producers? Demonstrate and explain if this restricted trade is better that without trade? (10 marks)
iii) By imposing import tariff on photocopy machine imports from China, the government earned tariff revenue. Determine the amount of the tariff revenue. (2 marks)
International Marketing And Export Management
ISBN: 9781292016924
8th Edition
Authors: Gerald Albaum , Alexander Josiassen , Edwin Duerr