Question

Assumethatthere is a positive externality for Turkey in increasing its “combatdrone” production from 50 to 80...

Assumethatthere is a positive externality for Turkey in increasing its “combatdrone” production from 50 to 80 units. For this reasonTurkey imposes a tariff on US combatdrone exports. Explain the situation graphically:

Show the producer and consumer surplus before tariff in Turkey.

Show on a separate graph the effect of externality with tariff. What happened? Explain.

What is the net welfareeffect of thispolicy on Turkey?

Instead of a tariffimaginethatTurkeysupportsdomesticcombatdroneproducerswith a productionsubsidy. Whatwouldhappen?

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #2
  • Consumer surplus before tariff in Turkey = A+B+C+D+E+F+G+H+I

Producer surplus before tariff in Turkey = J

  • Externality will cause supply to rise from 50 to 80 units which will cause price of domestic drone to fall which helps in raising its demand.
  • Consumer surplus after tariff in Turkey = A+B+C+D

Producer surplus after tariff in Turkey = E+J

Government surplus after tariff in Turkey = G+H

Deadweight loss after tariff in Turkey = F+I

Overall this would reduce the overall surplus of the market.

  • Subsidy will induce domestic producers to raise supply of their product which will shift the supply curve to its right. It will reduce the imports level as imports is calculated at demand - supply at a specific price.
answered by: anonymous
0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Trade barriers Suppose there are only two countries in the world (Home and Rest of the...
Trade barriers Suppose there are only two countries in the world (Home and Rest of the World) which produce and consume wheat. The price of wheat in Rest of the World is equal to 2 and Home is a small country with the following demand and supply functions for wheat: ?h = 50 − 10? ?h = 30 + 10? a. Compute and graph the equilibrium in the absence of trade. What would be the consumer and producer surplus? b....
Assume that electricity production has been done by several regional firms in the U.S. each operating...
Assume that electricity production has been done by several regional firms in the U.S. each operating as a pure monopoly. Explain and graphically illustrate how the electrical monopolist would determine its profit maximizing price and output level. (Label Pm and Qm) Identify any area of consumer and/or producer surplus for the profit maximizing monopoly. Identify the deadweight loss for the monopolist. Now assume the federal government imposes a regulation on the monopoly. Draw a new monopoly graph for part 2....
In a presidential campaign, a candidate proposes a 50 cent per gallon tax on gasoline. The...
In a presidential campaign, a candidate proposes a 50 cent per gallon tax on gasoline. The idea of a gasoline tax is both to raise government revenue and to reduce oil consumption and the country’s dependence on oil imports. The Demand and supply functions are given by Qd=150-50P and Qs=60+40P respectively. If the candidate is voted into power and the policy is adopted: Calculate the equilibrium quantity and price before tax.(1 mark) What will be the equilibrium quantity and price...
Suppose that scientists have discovered that the production of honey has a very significant positive externality....
Suppose that scientists have discovered that the production of honey has a very significant positive externality. The main input into honey production, honey bees, are most effective when there are orchards nearby. The bees gather nectar from the orchards and simultaneously pollinate the orchard. This pollination is very valuable to the orchard. However, honey firms (beekeepers) are not compensated for this positive impact on orchards. This positive externality means that the true marginal social value of producing honey is different...
Production possibilites table Combination: A B C D E F Capital goods:5 4 3 2 1...
Production possibilites table Combination: A B C D E F Capital goods:5 4 3 2 1 0 Consumer goods:0 10 18 24 28 30 Construct a PP curve with capital goods on the horizontal axis on the graph below. (Pay attention to the shape of the curve.) Can this nation produce 14 units of capital goods? Explain. What is the opportunity cost of the first unit of capital goods? What is the opportunity cost of the fifth unit of capital...
1- A.U.S-owned automobile factory uses $50 million worth of materials produced in the US. and $10...
1- A.U.S-owned automobile factory uses $50 million worth of materials produced in the US. and $10 million of worth purchased from foreign countries to produce $100 million of automobiles. $70 million worth of these automobiles are purchased by consumers, $25 million are sold in foreign countries, and million are added to inventory How much of this production is included in US. GDP? By how much do these transactions alone affect U.S. net exports? 2- Suppose that instead of a supply-demand...
Chapter 5 Import Protection Policy: Import Tariffs I. Chapter Overview 1. Types of import tariffs in...
Chapter 5 Import Protection Policy: Import Tariffs I. Chapter Overview 1. Types of import tariffs in terms of the means of collection in terms of the different tariff rates applied in terms of special purposes for collection 2. The effects of import tariffs concepts of consumers surplus and producers surplus the welfare effects of import tariffs 3. Measurement of import tariffs the "height" of import tariffs nominal versus effective tariff rates II. Chapter Summary 1. The means of collecting import...
Closed book and closed notes. 3. Basic Calculators are permitted. 4. Read all instructions and questions...
Closed book and closed notes. 3. Basic Calculators are permitted. 4. Read all instructions and questions carefully. 5. Show all your work. 6. Please place your Coquitlam College Identification Card face up and visible on your desk. 7. Electronic devices including cellular phones must be turned off and put away during the exam. 8. Any student who has a cell phone or other unauthorized electronic device (i.e. laptop, and et cetera.) on their person or around their desk during this...
2. A demand curve indicate a. the maximum willingness to pay for a given quantity b.the...
2. A demand curve indicate a. the maximum willingness to pay for a given quantity b.the consumer's gain from exchange c.the market price of a good or service d. the equilibrum quantity 3. trade permitts countries to a. consume more than they capable of producing b.produce based on their comparative advantage c.specialize more fully d.all of above 4. which of the following dose not impact how elastic supply is? a. whether the supply is local or global b.the share of...
ECO 101-S70: Final Quiz 2 CHAPTER 3: Demand, Supply and Equilibrium 1. Which of the following...
ECO 101-S70: Final Quiz 2 CHAPTER 3: Demand, Supply and Equilibrium 1. Which of the following could cause a decrease in consumer demand for product X? a.   a decrease in consumer income b.   an increase in the prices of goods which are good substitutes for product X c. an increase in the price which consumers expect will prevail for product X in the future d. a decrease in the supply of product X 2. If two goods are substitutes for...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT