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

28. If the Italian government allows international trade but imposes a per unit tariff of $5 on imported clocks, making the market price for clocks in Italy $15, the total quantity of clocks consumed by Italian consumers is 42,000 clocks. Hence, option(B) is correct.

29. If the Italian government allows international trade but imposes a per unit tariff of $5 on imported clocks making the price of clocks in Italy $15, the amount of revenue the Italian government collects from the tariff is $(15-10)(42,000-12,000)= $(5)(30,000)= $ 1,50,000. Hence, option(C) is correct.

30. If the Italian government allows international trade but imposes a per unit tariff of $5 on imported clocks, making te price of clocks in Italy $15, the total quantity of clocks imported into Italy is (42,000-12,000)= 30,000 clocks .Hence, option(D) is correct.

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