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Author Question: Suppose Canada has a 20% tariff on the import of carpets, and Canada currently imports this product ... (Read 57 times)

Ale

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on: Oct 12, 2022
Suppose Canada has a 20% tariff on the import of carpets, and Canada currently imports this product from India at a with-tariff price of $22. The with-tariff price of identical carpets from the United States is $24. Now suppose a free-trade agreement with the U.S. eliminates the tariff and so the no-tariff price from the U.S. is $20. Canada now purchases carpets from the U.S. Is Canada made better off from this trade diversion?
◦ Yes, because Canadian consumers are paying less for carpets and consumer surplus has increased.
◦ No, because before the agreement Canada was buying from India at a lower (pre-tariff) price and collecting tariff revenue.
◦ No, because it would still be cheaper for individual consumers to buy carpets from India.
◦ Yes, because Canada has diverted trade toward the United States.
◦ Canada is not better or worse off. The gain in consumer surplus in Canada is identical to the loss in tariff revenue to the Canadian government.
Microeconomics ¦ Ragan ¦ 17th Edition
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Marked as best answer by Ale on Oct 12, 2022

hiyayyay

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Reply #1 on: Oct 12, 2022
Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.
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Ale

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Reply 2 on: Oct 12, 2022
Great answer, keep it coming :)

dawsa925

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Reply 3 on: Yesterday
Thanks for the timely response, appreciate it

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