Absence of trade-tariff is place on the importation

Reference no: EM13685404

The world price of wine is below the price that would prevail in the United States in the absence of trade.

a. Assuming that American imports of wine are a small part of total world wine production, draw a graph for the U.S. market for wine under free trade.

b. Now presume that a tariff is place on the importation of wine into the United States to protect domestic wine producers. What does this do to the price?

c. Draw a new diagram illustrating the price change as well as the changes to the quantity of imports.

Reference no: EM13685404

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