A small country can import a good at a world price of 10 per unit. The domestic supply curve of the good is S = 20 + 10P, D = 400 - 5P.;In addition, each unit of production yields a marginal social benefit of 10.;Now, suppose demand and supply are exactly as described in problem 3, but there is no marginal social benefit to production. However, for political reasons the government counts a dollar's worth of gain to producers as being worth $3 of either consumer gain or government revenue. Calculate the effects on the government's objective of a tariff of 5 per unit.
Paper#15489 | Written in 18-Jul-2015Price : $22