The market supply curve shows the
A) minimum price suppliers must receive in order to produce another unit of the good.
B) maximum price suppliers must receive in order to produce another unit of the good.
C) amount of producer surplus suppliers receive.
D) profit that suppliers receive from producing another unit of the good.
A
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The graph above shows a small country that can import at the world price of Pw. Suppose that the government imposes a tariff of $T per unit (and suppose that this does not raise the domestic price so much that there will be no trade. Use the graph above to illustrate the effects of the tariff. Show the new areas of consumer surplus, producer surplus, and government revenue, and the deadweight
losses due to the tariff. Who wins and who loses from the tariff? What will be an ideal response?
A lower price elasticity of demand coefficient occurs when:
a. many substitutes exist. b. the quantity demanded is more responsive. c. few substitutes exist. d. the market is broadly defined.