Microeconomics Trade Restrictions Tariffs & Balance Of Payments

Microeconomics

Trade Restrictions – Tariffs

Directions: Answer the questions below based on the graph.

Microeconomics

  • How many units will the domestic firms produce without trade?
  • How many units will the domestic firms produce without a tariff if the foreign producer can sell the product at a $4 price?
  • How many units will the foreign firms produce / sell if a government tariff of $2.00 is imposed on foreign goods?
  • What will be the total government revenues if a tariff of $2.00 is imposed on foreign goods?
  • What will be the total deadweight losses if a tariff of $2.00 is imposed on foreign goods?