Inex is a developing country, with a large agricultural sector that grows com and raw cotton,
with any shortage in the market imported from its neighbouring countries. Demand and
supply for the product is outlined as follows:
Question 1
Price ‘Quantity demanded ‘Quantity supplied
10 5,000 1,000
20 4,000 2,007
30 3,000) 3,000)
40. 2,000) 4,000
30 1,000 5,000)
(@) i. Draw the above on a supply
and demand diagram, adding a
world supply price of $ 20. //
mark]
ii, Calculate the sales level in the
economy’? What market share is
produced by domestic producers
and which share comes from
overseas’ firms? [2 marks)
(b) The government imposes a tariff of $ 10 per unit. Draw the impact of this on equilibrium
price, total output and the share of sales taken by imports? [2 marks]
(c) Describe the impact of the tariff on the following stakeholders: /4 marks]
+ consumers
+ domestic producers
+ the government,(@) The following diagram illustrates the market for com in the same country.
Stementt
. a
(@ Calculate the size of the tariff per KG of com? [! mark](ii) Calculate the increase in domestic production after the imposition of the tariff. (2 marks]
Gii) Calculate the decrease in imported produce as a result of the tariff. (2 marks]
Civ) Calculate the tariff revenue collected by the government after the imposition of the tariff.
22 marks}
(¥) Calculate the change in revenue enjoyed by domestic producers after the imposition of the
tariff. (2 marks)
(vi) Caleulate the change in revenue received by imported producers after the imposition of
the tariff. [2 marks]