Purchase Solution

Government Tariff Revenue

Not what you're looking for?

Ask Custom Question

From Figure 8-4, determine the effect of a 33 percent import tariff on commodity X.

The tariff-inclusive price will be $3(1+.33) = $4. What are the impacts of tariff on domestic consumption, domestic production, imports, and government's tariff revenue? Please show the numbers, for example, the domestic consumption will decrease from 600X to 500X.

Figure 8-4 Consumption, Production and Imports under Free Trade - In the absence of trade, equilibrium is at point E, where Dx and Sx intersect, so that Px = $5 and Qx = 400. With free trade at the world price of Px = $3, domestic consumers purchase AC=600X, of which AB = 200X are produced domestically and BC = 400X

I have attached the figure!

Purchase this Solution

Solution Summary

Government Tariff Revenue is figured.

Solution Preview

Please refer attached file for graph.

Solution:

In case government imposes a tariff of 33% on imports. New Import price will be $3*(1.33%)=$4

Sf curve will move to Sf'.

C' point ...

Solution provided by:
Education
  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
Recent Feedback
  • "Thank you"
  • "Really great step by step solution"
  • "I had tried another service before Brain Mass and they pale in comparison. This was perfect."
  • "Thanks Again! This is totally a great service!"
  • "Thank you so much for your help!"
Purchase this Solution


Free BrainMass Quizzes
Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.