Microeconomics 18th Edition by Campbell McConnell, Stanley Brue, Sean Flynn

Exercise 10

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 one-half 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