Gce Model Questions Vol1 2022 Economics Question 43
Practice objective / multiple choice question 43 from the 2022 Gce Model Questions Vol1 Economics examination.
Country X imports wheat at the world price of \(\$2\) per kg, importing 500,000 kg annually. The government imposes a specific tariff of \(\$0.30\) per kg. Domestic demand has a price elasticity of \(-1.5\) and domestic supply a price elasticity of \(0.5\). Initially, domestic supply is 300,000 kg. Assuming the elasticities apply to the 15 % price increase caused by the tariff, calculate (a) the new quantity of wheat imported after the tariff and (b) the net welfare change (in dollars) resulting from the tariff.
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This is Gce Model Questions Vol1 2022 Economics Question 43. It is one of the objective questions from the 2022 Gce Model Questions Vol1 Economics examination.
Difficulty level: Medium .
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