Optimal Tariff

# Optimal Tariff - Assignment Optimal Tariff Question and...

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Assignment: Optimal Tariff Question and Answer

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Question: Tariff and Trade Let us suppose that the U. S. demand curve for sugar is given by D = 300 - 3p. Its supply curve is, S = 100 + 2p. Consider that the rest of the world has an export supply curve of sugar given by XS* = - 100 + 5p.
Question: Effect of Tariff Derive the U S import demand schedule. What would be the prices of sugar in the U. S. and the rest of the world if the U. S. did not trade? Suppose the U. S. trades at zero transportation cost. Find the world price under free trade. What is the volume of trade? The U. S. government considers a specific tariff \$ t per unit of on sugar imports. Determine the price of sugar in the U. S. and the rest of the world in the event the tariff is imposed. What would be the quantity of sugar supplied and demanded in the U. S. and, therefore, the volume of trade?

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Question: Welfare Effect of Tariff Determine the effect of this proposed tariff on the welfare of the sugar producers and consumers in the U. S.
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