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Unformatted text preview: (v) [4 points] Determine the effect of this proposed tariff on the welfare of the sugar producers and consumers in the U. S. (vi) [2 points] What is the tariff revenue for the U. S. government? (vii) [8 points] Show graphically and calculate the terms of trade gain, the production distortion, the consumption distortion and the total effect on welfare of the proposed tariff. (viii) [6 points] If the U. S. government wants to impose a specific tariff such that it maximizes social welfare, what will that be? Explain. (ix) [8 points] Suppose due to the pressure from the sugar-lobby the U. S. government counts a dollar’s worth of gain to the sugar producers as being worth $1.5 of either consumer gain or government revenue. What is the effect of the specific tariff t, on the government’s new objective ? In the presence of this political pressure, what tariff will the government impose? At this rate, what is the amount of trade? Explain....
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This document was uploaded on 02/10/2012.
- Fall '09