Questions and Answers
What does the optimal tariff equal to in the given context?
Inverse of the elasticity of import demand
In the scenario described, what does the monopolist's profit maximization condition indicate?
Import demand equals 50
How does the monopolist's marginal cost change with a tariff?
Increases by twice the value of the tariff
What is the relationship between import demand elasticity and protectionism?
Signup and view all the answers
How does a decrease in import demand elasticity affect the optimal percentage tariff?
Signup and view all the answers
What happens to the monopolist's exports when a tariff is imposed?
Signup and view all the answers
What is the import demand elasticity of the good in the scenario described?
Signup and view all the answers
In the scenario, what is the price charged by the monopolist for the good?
Signup and view all the answers
How many units are exported by the monopolist in the free trade equilibrium?
Signup and view all the answers
What is the marginal cost of the monopolist in this scenario?
Signup and view all the answers
How does the monopolist maximize its profits?
Signup and view all the answers
What is a specific tariff?
Signup and view all the answers
If the world price of a good falls below Pw and a country imposes an import quota, what will happen?
Signup and view all the answers
What happens if a country faces the world price Pw and trades freely without any restrictions?
Signup and view all the answers
In monopoly pricing, what is the objective of the monopolist?
Signup and view all the answers
Which factor influences import demand elasticity the most?
Signup and view all the answers
In a scenario of free trade between Indonesia and Thailand, what is the world price of pineapples?
Signup and view all the answers
What is the volume of trade between Indonesia and Thailand when they engage in free trade?
Signup and view all the answers
What effect does a 0.5 tariff imposed by Indonesia have on the price of pineapples in each country?
Signup and view all the answers
After the 0.5 tariff, what is the price of pineapples in Indonesia?
Signup and view all the answers
Under free trade, what happens to the quantity of pineapples supplied and demanded in Thailand?
Signup and view all the answers
What is the impact of a 0.5 tariff on the volume of trade between Indonesia and Thailand?
Signup and view all the answers
What does a lower import demand elasticity imply?
Signup and view all the answers
If a country has a 100% optimal percentage tariff, what does this indicate?
Signup and view all the answers
In the context of tariffs, what is the relationship between the optimal percentage tariff and import demand elasticities?
Signup and view all the answers
How does a monopoly facing a linear demand curve affect its pricing strategies?
Signup and view all the answers
What is the significance of lower deadweight losses in the context of tariffs on inelastic goods?
Signup and view all the answers
What economic concept is associated with the optimal percentage tariff being 82%?
Signup and view all the answers