1 j0000 bl low cle rna d o t1nt equd j til ioow 2 jie

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Unformatted text preview: 0 I ()OC {'_ S :: 1 z ' (Lj •15 - 3 .1) · J0,000 / - bl low cle rna d o t1Nt .equd '/J> til IO.OW 2 Ji£e <hadi LAJ b.rctef Prices, Output, and Consumption • Assume: j 1. There is only one price for a good (world price PW) -te1nf -tf uncl.J,, f ~CJ f:]J 2. Foreign producers are willing to supply us with all of the units of the good that we want at that price Prices, Output, and Consumption (cont) • Now assume: Government imposes a tariff of amount "t." Importers will still be able to buy the good from foreign producers for p w• but they will have to pay the import tax of "t." - The tax is subsequently tacked onto the price to domestic consumers: price to consumers is Pw + t=P, • - The consumption of the imported good subsequently decreases from 0 2 to Q,*. 6-9 3...
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This document was uploaded on 03/27/2014 for the course ECON E430 at Indiana University South Bend.

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