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LARGE COUNTRY CASE AND OPTIMAL TARIFF THE ASSUMPTION HERE IS THAT THE IMPORTING COUNTRIES POLICIES CAN IMPACT WORLD PRICES
A POLICY THAT REDUCES A COUNTRY’S IMPORTS WOULD LOWER WORLD PRICE
PRICE QUANTITY PWPW IMPORT NO TARIFF S D ES ED
PRICE QUANTITY PWPW IMPORT TARIFF S D ES ED
PRICE QUANTITY PWPW IMPORT TARIFF A D B E C H FG I J P W1 P1P1 S D ES ED
PRICE QUANTITY PWPW IMPORT TARIFF A D B E C H FG I J P W1 P1P1 INCREASE IN PRODUCER SURPLUS S D
PRICE QUANTITY PWPW IMPORT TARIFF A D B E C H FG I J P W1 P1P1 S D CONSUMER LOSS
PRICE QUANTITY PWPW IMPORT TARIFF A D B E C H F G I J P W1 P1P1 S D GOVERNMENT REVENUE
PRICE QUANTITY PWPW IMPORT TARIFF S D ES ED PIPI P W’ A H F C E B D G QTQT LOSS TO EXPORTERS
FIXED INTERNAL PRICES BY IMPORTERS A VARIABLE LEVY
THE AMOUNT OF THE TARIFF CHANGES AS THE WORLD PRICE CHANGES L = P T - P W
S ED PTPT PWPW TARIFF D PRICE QUANTITY
S PTPT PWPW TARIFF D PRICE QUANTITY PWPW WORLD PRICE FALLS - TARIFF SIMPLY INCREASES PERFECTLY INELASTIC
Minimum price where some of the product is imported P Q O PwPw EU supply QS1QS1 Qd1Qd1 EU demand Imports.
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