Figure W: The market for docks in Italy with S is the supply curve of Italian pr

Question

Figure W: The market for docks in Italy with S is the supply curve of Italian producers and D Is Italian consumers demand curve. The horizontal axis labeled "Q" measures the quantity of clocks. The vertical axis labeled "P" measures the price per clock. PHome $25, is the price of a clock in italy when Italy does not partiopate in intemational trade. world $10, is the price of a clock in italy when Italy participates in intemational trade. Pworldtanff $10+ S5 $15, ia the price of a clock in taly when Italy partiipates in trade and the Itaian government imposes a tariff of $5 per dock a4 $25 $15 $10 home Pworld+ tariff P world a3 a2 1b2 b3b4 a1

Explanation / Answer

32. Ans: b1 + b4

Explanation:

Before tariff Total surplus = a1 + a2 + a3 + a4 + b1 + b2 + b3 + b4 + c1 + c2

After tariff Total surplus = a1 + a2 + a3 + a4 + c1 + c2

Government Revenue = b2 + b3

DWL = b1 + b4

33. Ans: Trade barriers to increase domestic demand and employment.

Explanation:

Beggar-thy-neighbor policiy aims at protecting domestic industries that compete against imported goods.

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