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    How can I illustrate a diagram with for example, US imposing tariffs on Chinese imports. ?
    thank you
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    no one?
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    (Original post by satisfactionatlast)
    How can I illustrate a diagram with for example, US imposing tariffs on Chinese imports. ?
    thank you
    see attachment

    Here D and S represent domestic demand for and domestic supply
    of a particular good and the pre-trade equilibrium is at (P,Q). The
    world price of this good (Pw) is lower that the price of domestically
    produced goods (P) and so quantity demanded increases from Q
    to Q4 and the quantity supplied by domestic firms faUs to Q , . This
    shortfall (Q, to Q4) is covered by imports. Now this country decides
    to put a tariff on imports and so this increases the price of imports
    (Pwr) so reducing the quantity demanded to Q3 and increasing the
    quantity supplied by domestic firms to Q 2. This reduced shortfall is
    covered by a reduced number of imports (Q2 to Q3) .

    The government will gain revenue from this tariff equal to the area
    (02 to 0 3) x the distance between Pw and PWT (shaded area).

    The final effects of a tariff will depend upon the price elasticities of
    demand and supply.
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