ECON 441 Final: Final Exam Fall Summer 2002
Document Summary
The questions are worth a total of 90 points, as indicated. You will have 120 minutes to complete the exam: [18 points] the figure on the next page shows domestic demand and supply curves for a country. (the same figure appears twice on the page, for your convenience. ) Domestic price equals world price plus tariff: + 4 = . Find the following changes that are due to this tariff increase (you are not comparing here to free trade, but rather to the initial situation with the tariff): Price rises to 8+8 = ; supply rises to 14 and demand falls to 17, so imports fall to 3: the change in welfare of suppliers. Area a = +: the change in welfare of demanders. Area a+b+c+d = : the change in tariff revenue. Area c+f minus e+f+g = c (e+g) = 12 24 = : the change in welfare of the country as a whole.
