Question

Explain, using our increasing returns model with firms that have different marginal costs and some cost to export (t), how an increase in tariffs affects firms’ entry/exit in exporting, and firms’ export sales. Draw a diagram(s) to help you explain

Answer 1

according to Bengam," As increase of labout nd capital leads generally to improved organisation which increase the efficiency of the work of labour and capital. Therefore, an increase of labour and capital generally gives a return which increase more than in proportion."

- Increase in tariffs affects firms export sales. It can raise the cost of parts and materials, which would raise the price of goods using those inpputs and reduce private sector output. the more valuable dollar would make it more difficult for exporters to sell their goods on the global market, resulting in loweer revenues for exporters.

سامن) PAGE NO DATE Ang. The increasing retins model stales that the volume of output sceept on linneasing withe every increase in the inpuls where a given juheas in infuls ready to a more then proportionate lucrease in outputta I of the propostional increan in output is longer than that of the inputs, then all have increasing gehry of scale output impuls & (2) scale Prod. Sipole Case of increasing rehrry to meal and fixed cost- TL (0) = f t ell Acco) = Plote So Au con- decreer with a Ас me 2020.03.181

Trade barrier such as tariffs inncrease the cost of both consumer and producer goods and depress the economic benefits of competition, inhibiting economic growth. tariffs are directly responsible for inflation, depressed aggregate demand, less capital expenditures, and lower productivity levels.

tariffs may be passed on to producers and consumers in the dorm of higher prices.