Exhibit 19-5 In Exhibit 19-5, with a tariff of $0.50 per unit and a world price of $1.00,

Question

Exhibit 19-5  In Exhibit 19-5, with a tariff of $0.50 per unit and a world price of $1.00,

Quizplus · Accepted Answer

With a tariff of $0.50 per unit, the domestic price will be $1.50 ($1.00 + $0.50 = $1.50). Since the world price is $1.00 and the domestic price is now higher, domestic consumers will want to purchase less of the good while domestic producers will want to produce more. The quantity demanded domestically will be 75 units (at $1.50) and the quantity supplied domestically will be 50 units (at $1.50). Therefore, the difference between quantity demanded and quantity supplied domestically is 25 units, which will be imported from the world market. So, 25 units will be imported.

Exhibit 19-5 in Exhibit 19-5, with a Tariff of $0.50