Principles of Economics, 7th Edition

Published by South-Western College
ISBN 10: 128516587X
ISBN 13: 978-1-28516-587-5

Chapter 9 - Part III - Application: International Trade - Problems and Applications - Page 191: 9

Answer

a) Please see the graph. b) Please see the screenshot. c) The tax raises more revenue for the government. The tariff has the smaller deadweight loss.

Work Step by Step

a) The quantity consumed (with the tariff) is $Q^{D}_{1}$, and the quantity supplied (with the tariff) is $Q^{S}_{1}$. b) The screenshot shows how the tax would impact consumers and producers. c) The deadweight loss with the tax is the sum of areas $F+I$, and the deadweight loss with the tariff is area $I$.
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