Question

Figure 9-22 The following diagram shows the domestic demand and domestic supply in a market. In addition, assume that the world price in this market is $40 per unit. Price 190 180 170 160 150 140 130 omestic Suppl 110 100 90 80 70 60 50 40 20 Deman 10 200 400 600 80 1000 1200 14001600 1800 2000 2200 2400 antity 15. Refer to Figure 9-22. Suppose the government imposes a tariff of $20 per unit. Relative to the free-trade outcome, the imposition of the tariff a. decreases imports of the good by 300 units and increases domestic production of the good by 300 units. b. decreases imports of the good by 300 units and increases domestic production of the good by 600 units c. decreases imports of the good by 600 units and increases domestic production of the good by 300 units d. decreases imports of the good by 600 units and increases domestic production of the good by 600 units

Answer 1

Ans) the correct option is c) Decreased imports of the goods by 600 units and increases domestic producet of  the good by 300 units.

When the tax is imposed. Price = $100

Quantity demanded = 900

Quantity supplied = 1500

Imports decrease by = 1500 - 900 = 600

Increase in domestic production = 1500  - 1200 = 300