Problem set 3

Problem set 3 - 1. a.) The effects during the first few...

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1. a.) The effects during the first few years will be that the consumers will lose because they will be forced to pay higher prices for the tiles while the industry is being developed in Canada. The government will benefit though because they will be receiving the money from the tariff. The costs to Canadian national well being are that the consumers will be spending more money on the imported goods until the infant industry can become large enough to supply the amount demanded. Until that time, the consumers will be losing in the short run. In the long run however, the consumers will most likely gain from the tariff and begin to purchase domestic goods. b.) Protection of an infant industry is justified because if there was no tariff, consumers would just be buying the cheaper product which is likely to be the one that is imported. Due to the tariff, the imports would now be more expensive and hopefully once the infant industry has got up on its feet, consumers would begin to buy the products that are produced domestically. 2.
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This note was uploaded on 02/15/2011 for the course FBE 462 at USC.

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Problem set 3 - 1. a.) The effects during the first few...

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