QUESTION 6 1 points Save Answer Price 1 23 Quantity Figure 8a) Consider a small

Question

QUESTION 6 1 points Save Answer Price 1 23 Quantity Figure 8a) Consider a small country initially applying a tariff,t, to imports of a good like that shown in Figure 8-5 in the textbook. Suppose that the country decides to reduce its tariff to t, as shown in Figure 8a Which of the following areas represents the change in government revenues? gti-c O -c-b-d QUESTION 7 10 points Save Answer An 10% ad-valorem import tariff has the same effects as A 10% production tax and a 10% consumption tax. A 10% production subsidy and a 10% consumption tax. A 10% export subsidy and a 10% consumption tax O A 10 percent income tax

Explanation / Answer

1> g+i-c

Reason

At first, the gain from tariff is c+h, as the tariff decreased, the tariff revenue became g+h+i. Thus, the change is g+i-c.

2> a 10% production subsidy and 10% consumption tax

Reason

This is basically giving the domestic producers more opportunity and then taxing all the goods on the same rate.

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