This figure shows demand and supply for a product in country A, which is interested in engaging in international trade. The import price from country C is $3 and from country B is $4. Country A imposes a fixed tariff of $2 per unit of import. Answer the following questions based on these assumptions.

 

Based on information provided in the figure above, if country A decides to enter into a free trade agreement with country B, the tariff revenue collected from country B will be:

	a.	0
	b.	IHPQ
	c.	IHVU
	d.	UVPQ

Based on information provided in the figure above, if country A decides to enter into a free trade agreement with country B, the change in government tariff revenue, relative to pre-FTA will be:

	a.	gain of IHPQ
	b.	loss of IHPQ
	c.	gain of IHVU
	d.	loss of UVPQ

This figure shows demand and supply for a product in country A, which is interested in engaging in international trade. The import price from country B is $3 and from country C is $4. Country A imposes a fixed tariff of $2 per unit of import. Answer the following questions based on these assumptions.

Based on information provided in the figure above, if country A decides to import from the low-cost country, the loss to consumer can be measured by the area:

	a.	GHFE
	b.	RSFE
	c.	LKFE
	d.	GHSR

Transcribed Image Text:

10 9 7 6 10 5 Price Demand 4+ 3₁ 2 M m 11C 00 Q > N Supply Quantity, 10 9 7 6 10 5 Price Demand 4+ 3₁ 2 M m 11C 00 Q > N Supply Quantity,

Answer rating: 100% (QA)

Risk free rate 45 Market risk premium 65 Beta for company A 083 As per CAPM cost of equity Ri... View the full answer