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Describe price–quantity effects

Describe price–quantity effects of this tariff to

(a) domestic consumers,

(b) domestic producers, and

(c) foreign exporterts

E

Expert

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A tariff of PwP

(a) harms domestic consumers through increasing price from Pw to Pt  and reducing consumption from Qe to Qd;

(b) aids domestic producers through the raise in price from Pw to Pt & the expansion of domestic production from Qa to Qb;

(c) harms foreign exporters through declining exports from QaQe to QbQd.

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