American imports of wine are a small part of total world

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Reference no: EM13184051

1. 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 suppose 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: EM13184051

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