Tariffs and Import Quotas

A small country takes the world price

What a tariff does

The welfare ledger

Quotas: same prices, different pockets

In the blanket market with demand $Q_d = 400 - 10P$ and supply $Q_s = 10P$, the country opens to trade at a world price of 12 dollars. What are imports under free trade?

After the 4 dollar tariff raises the domestic price to 16 dollars, how is the 1040 thousand dollar consumer loss split among producer gain a, government revenue c, and deadweight loss b + d?

The government replaces the 4 dollar tariff with an import quota of 80 thousand blankets. How do the outcomes compare?

Which statement best explains why a tariff in a small price-taking country must create deadweight loss?

With the 4 dollar tariff in place, imports fall to 80 thousand blankets. Compute the government's annual tariff revenue in thousands of dollars, and write the number.

Using the consumer loss of 1040, the producer gain of 560 and the revenue of 320, compute the total deadweight loss in thousands of dollars, and write the number.