Macroeconomics + Economy 2009 Update 18th Edition by Campbell McConnell, Sean Masaki Flynn,Stanley Brue

Exercise 11

KEY QUESTION 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 quantity On your diagram show a protective tariff that eliminates approximately onehalf 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