I don't know if it comes under elasticities but the world firms could decide not to pass on the extra costs of the tariff and so it may have a limiting effect on domestic production.
If demand is price elastic, the incidence of the tariff falls more squarely on the importing producers. This effectively increases costs of production, and will reduce the supply, bidding the price up.
My problem was I spent too much time on macro and barely anything on micro. It's probably cuz I didn't watch EconplusDal for micro. Good luck tomorrow everyone!
what if the producer doesn't pass all the tax to the consumer, if it's elastic demand, then how do you measure government revenue, because new price wouldn't be "intial price + tax "
I love how the smallest of things excite this guy lol like standing on the left and a tariff graph
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I don't know if it comes under elasticities but the world firms could decide not to pass on the extra costs of the tariff and so it may have a limiting effect on domestic production.
???
If demand is price elastic, the incidence of the tariff falls more squarely on the importing producers. This effectively increases costs of production, and will reduce the supply, bidding the price up.
Thank you so much! This explanation helped a lot !
Where my last minute May 2018 squad at???
right here my homie
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haha the questions weren't bad, not sure how did though, hoping for a 6 but yea..
My problem was I spent too much time on macro and barely anything on micro. It's probably cuz I didn't watch EconplusDal for micro. Good luck tomorrow everyone!
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what if the producer doesn't pass all the tax to the consumer, if it's elastic demand, then how do you measure government revenue, because new price wouldn't be "intial price + tax "
What about cost push inflation ? Would that count for a negative impact of tariff ( protectionism ) ?
Yes I believe so since imports become more expensive.
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do tariffs with inelastic demand/supply generate more revenue than tariffs with elastic demand/supply, like normal taxes?
yes!
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