Microeconomics 19th Edition by Campbell McConnell,Stanley Brue,Sean Flynn

Exercise 7

Draw a domestic supply-and-demand diagram for a product in which the United States does not have a comparative advantage. What impact do foreign imports have on domestic price and quantify? On your diagram show a protective tariff that eliminates approximately one-half of the assumed imports. What are the price-quantity effects of this tariff on ( a ) domestic consumers, ( b ) domestic producers, and ( c ) foreign exporters? How would the effects of a quota that creates the same amount of imports differ?