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The figure below shows the national market for mopeds in a small country. Dd and Sd are the domestic demand and supply curves of mopeds, respectively. Initially, the country's government has a tariff on imports of mopeds. Price S800 $750 0 0.5 0.6 Marginal External Benefit $140 $125 0 12 14 The figure below shows the marginal external benefit curve (MEB) of the country from the production of domestic mopeds. 0.3 0.6 SA Domestic price line after tariff World price line Da Quantity (Millions of mopeds per year) MEB Quantity (Millions of mopeds per year) What will be the impact on the national well-being if, instead of imposing a tariff of $50 per unit, the government provides a subsidy of $50 per unit to the domestic manufacturers of mopeds?

The figure below shows the national market for mopeds in a small country. Dd and Sd are the domestic demand and supply curves of mopeds, respectively. Initially, the country's government has a tariff on imports of mopeds. Price S800 $750 0 0.5 0.6 Marginal External Benefit $140 $125 0 12 14 The figure below shows the marginal external benefit curve (MEB) of the country from the production of domestic mopeds. 0.3 0.6 SA Domestic price line after tariff World price line Da Quantity (Millions of mopeds per year) MEB Quantity (Millions of mopeds per year) What will be the impact on the national well-being if, instead of imposing a tariff of $50 per unit, the government provides a subsidy of $50 per unit to the domestic manufacturers of mopeds?

Principles of Economics 2e
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter12: Environmental Protection And Negative Externalities
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Problem 40P: Show the market for cigarettes in equilibrium, assuming that there are no laws banning smoking in...
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The figure below shows the national market for mopeds in a small country. Dd and Sd are the domestic demand and supply curves of mopeds, respectively. Initially, the country's government has a tariff on imports of mopeds. Price S800 $750 0 03 06 Marginal External Benefit $140 $125 0 1.2 14 0.3 0.6 Sa The figure below shows the marginal external benefit curve (MEB) of the country from the production of domestic mopeds. -Domestic price line after tariff World price line DA Quantity (Millions of mopeds per year) MEB Quantity (Millions of mopeds per year) What will be the impact on the national well-being if, instead of imposing a tariff of $50 per unit, the government provides a subsidy of $50 per unit to the domestic manufacturers of mopeds?
Transcribed Image Text:The figure below shows the national market for mopeds in a small country. Dd and Sd are the domestic demand and supply curves of mopeds, respectively. Initially, the country's government has a tariff on imports of mopeds. Price S800 $750 0 03 06 Marginal External Benefit $140 $125 0 1.2 14 0.3 0.6 Sa The figure below shows the marginal external benefit curve (MEB) of the country from the production of domestic mopeds. -Domestic price line after tariff World price line DA Quantity (Millions of mopeds per year) MEB Quantity (Millions of mopeds per year) What will be the impact on the national well-being if, instead of imposing a tariff of $50 per unit, the government provides a subsidy of $50 per unit to the domestic manufacturers of mopeds?
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