Economics: The Basics 1st Edition by Mike Mandel

Exercise 2

The U.S. imposes a new tariff of $5.00 on every pound of imported cheese.
a) Does imposing the tariff raise or lower the prices U.S. consumers pay?
b) Does it raise or lower the prices foreign cheese producers receive for the cheese they sell in the U.S.?
c) Does imposing the tariff increase or decrease the quantity of imported cheese? Illustrate your answer on a supply-demand diagram.
d) What impact does the tariff have on the supply and demand curves for domestic cheese? What happens to the prices and quantities of domestic cheese sold? Illustrate your answer on a supply-demand diagram.
e) Who is hurt by the cheese tariff? Who is helped?