Question
(a) Use a normal downward sloping demand curve and an upward sloping supply curve to illustrate and explain the “deadweight loss” from the imposition of a tariff on the imported substitute for a domestically produced product.
(b) Use your diagram to compare the effect of the tariff with a policy of providing the same benefits to domestic producers by means of a taxpayer funded per unit subsidy.
(b) Use your diagram to compare the effect of the tariff with a policy of providing the same benefits to domestic producers by means of a taxpayer funded per unit subsidy.
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