Exhibit 19.2

-Refer to Exhibit 19.2,which shows U.S.demand for and domestic supply of a good.Suppose the world price of the good is $1.00 per unit and a specific tariff of $0.50 per unit is imposed on each unit of the imported good.In such a case,_____

Question

Exhibit 19.2
 
-Refer to Exhibit 19.2,which shows U.S.demand for and domestic supply of a good.Suppose the world price of the good is $1.00 per unit and a specific tariff of $0.50 per unit is imposed on each unit of the imported good.In such a case,_____

Quizplus · Accepted Answer

With a world price of $1.00 and a specific tariff of $0.50, the effective price for the imported good becomes $1.50. This situation leads to domestic production until the domestic price matches this new effective price, reducing the quantity demanded and increasing the quantity supplied domestically. The difference between the domestic demand and supply at this new price level represents the quantity imported, which, based on the given options, is 25 units.

Exhibit 19.2 -Refer to Exhibit 19.2,which Shows U.S.demand for and Domestic Supply