Question

9. In figure 1, the wtomobile market demand (D) und supply (S) curves we rwn. If the government Introduces a tax of $10.000 per Incidence would be mobile, the Consumers pay 100 of the time Producers pay 100% of the Consumers pay Sons of the tax while producers pay Sons of the d Consumers pay 75% of the while producers pay 25% of the taxe e Producers pay 75% of the tax while consumers pay 25% of the tax. 10. In figure 1, the automobile market demand (D) and supply (S) curves are drawn. Suppose that the government eliminates all domestic taxes and opens the market to international trade. If the economy is a small open economy and the world price is P- $15,000, then there will be: a 4,000 automobiles imported. b. 8,000 automobiles imported C. 4,000 automobiles exported. d. 8,000 automobiles exported. e. No trade. 11. In figure 1, the automobile market demand (D) and supply (S) curves are drawn. Suppose that the government eliminates all domestic taxes and opens the market to international trade and the world price is P - $15,000. If the government introduces a tariff of $5,000 per automobile there will be: a. No trade. b. 4,000 automobiles imported. c. 8,000 automobiles imported. d. 4,000 automobiles exported. e. 8,000 automobiles exported. 12. In figure 1, the automobile market demand (D) and supply (S) curves are drawn. Suppose that the government eliminates all domestic taxes and opens the market to international trade and the world price is P = $15,000. If the government introduces a tariff of $5,000 per automobile the government will collect tariff revenue of: a. $0.00. b. $5,000. C. $5,000,000 d. $20,000,000 e. $50,000,000 13. In figure 1, automobile D and S are drawn. There are no domestic taxes and the international world price is P = $15,000. A tariff of $5,000 per automobile the government will create a DWL of: a. $5,000,000 b. $10,000,000 c. $15,000,000 d. $20,000,000 e. $50,000,000

Answer 1

9)C

10) B

11) B

12) D

13) B

@9) Q10) 911) 'as both ss @dd curves have same slopes so two parties share equal busden of tax = 50% option co) P= 15000 , Qd = 12,000, Qs = 4000. 80. Shortage of 8000., 80 Im ports of 8000 automobiles , B-). Now as & mall Nation, 80 Govt tariff ↑ domestic pruce by 5000 New P= 20,000 Qd'= 10,000, 851 - 6000 imports of = 10,000-6000 = 4000. opton B:) tariff Revenue = 50000 4000 - 20,000,000$ option d') DW L=T *X(5000)X2000 ]x8 = = 10,000,000 B) An Q12) 813)