Tariff_Example - Econ 11 Tariff Example 1 D $8 N S Domestic...

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Econ 11 Tariff Example 1 $4 $8 World Supply S S Domestic Supply Domestic Production Domestic Demand 0 100 200 300 400 Quantity of Clothing in America (units) Imports Figure 12-A. American production, imports, and consumption with free trade. N M E F D D Domestic Supply________ Domestic Consumption ________ World Price $4 Domestic Price ___ Imports ________ ------------------------------------------------------ $4 $8 World Supply S S Domestic Supply Domestic Production Domestic Demand 0 100 200 300 400 Quantity of Clothing in America (units) Imports Figure 12-B. American production, imports, and consumption with a nonprohibitive tariff. N M E F D D H J Domestic (U.S.) Price of Imports $6 Tariff
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Econ 11 Tariff Example 2 $4 $8 World Supply S S Domestic Supply Domestic Production Domestic Demand 0 100 200 300 400 Quantity of Clothing in America (units) Imports Figure 12-C. Economic cost of a nonprohibitive tariff. Area A is the inefficiency of wasted resources from increased domestic production. Area B is the loss of consumer surplus, another waste. Area C is the tariff revenue raised--$2 per import, times 100 units
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