Market for Tennis Shoes The diagram on the right shows the market for tennis sho

Question

Market for Tennis Shoes The diagram on the right shows the market for tennis shoes in the United States. If the United States does not trade with other countries, what are the equilibrium price and quantity of tennis shoes? Price Supply The equilibrium price is $ 35. and the equlibrium quantiy is 30 million pairs of shoes Suppose the United States opens to free trade with other countries and the world price is $20 per pair of tennis shoes. What are the quantity demanded, quantity supplied by domestic producers, and the quantity of imports? The quantity demanded is 55 milion pairs of shoes, the quantity supplied by 35 domestic producers is 15 million pairs of shoes, and the quantity of imports is 25 40 illion pairs of shoes 20e- Domestic producers complain and convince the government to impose a $5 tariff per pair of tennis shoes. What are the equilibrium price, quantity demanded quantity supplied by domestic producers, and the quantity of imports? Demand S 20 30 4555 (millions) The equilbrium price is $ the quantity demanded is million pairs of shoes the quantity supplied by domestic producers is million pairs of shoes, and the quantity of imports is illion pairs of shoes domestic producers is millin pairs of shoes, and the

Explanation / Answer

As it can be seen in the diagram that with the imposition of tariff of $5 per pair of shoes of tennis, the price increases to $25 per shoes. So this is the equilibrium price in the domestic country.

At this price of $25 per shoes, the quantity demand for tennis shoes is 45 millions pairs of tennis shoes.  The quantity supplied for tennis shoes is 20 millions pairs of tennis shoes. Hence the imported quantity of pairs of shoes after tariff of $5, is 25 millions of pairs of tennis shoes.

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