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Table 4.1. Production Costs and Prices of Imported and Domestic VCRs
Imported VCRs | Domestic VCRs | ||
| Component parts | $150 | Imported component parts | $150 |
| Assembly cost/profit | 50 | Assembly cost | 50 |
| Nominal tariff | 25 | Profit | 25 |
____ | ____ | ||
| Import price | Domestic price | ||
| after tariff | 225 | after tariff | 225 |
Table 4.1. Production Costs and Prices of Imported and Domestic VCRs
Imported VCRs | Domestic VCRs | ||
| Component parts | $150 | Imported component parts | $150 |
| Assembly cost/profit | 50 | Assembly cost | 50 |
| Nominal tariff | 25 | Profit | 25 |
____ | ____ | ||
| Import price | Domestic price | ||
| after tariff | 225 | after tariff | 225 |
Table 4.1. Production Costs and Prices of Imported and Domestic VCRs
Imported VCRs | Domestic VCRs | ||
| Component parts | $150 | Imported component parts | $150 |
| Assembly cost/profit | 50 | Assembly cost | 50 |
| Nominal tariff | 25 | Profit | 25 |
____ | ____ | ||
| Import price | Domestic price | ||
| after tariff | 225 | after tariff | 225 |
Table 4.1. Production Costs and Prices of Imported and Domestic VCRs
Imported VCRs | Domestic VCRs | ||
| Component parts | $150 | Imported component parts | $150 |
| Assembly cost/profit | 50 | Assembly cost | 50 |
| Nominal tariff | 25 | Profit | 25 |
____ | ____ | ||
| Import price | Domestic price | ||
| after tariff | 225 | after tariff | 225 |
Table 4.1. Production Costs and Prices of Imported and Domestic VCRs
Imported VCRs | Domestic VCRs | ||
| Component parts | $150 | Imported component parts | $150 |
| Assembly cost/profit | 50 | Assembly cost | 50 |
| Nominal tariff | 25 | Profit | 25 |
____ | ____ | ||
| Import price | Domestic price | ||
| after tariff | 225 | after tariff | 225 |
Table 4.1. Production Costs and Prices of Imported and Domestic VCRs
Imported VCRs | Domestic VCRs | ||
| Component parts | $150 | Imported component parts | $150 |
| Assembly cost/profit | 50 | Assembly cost | 50 |
| Nominal tariff | 25 | Profit | 25 |
____ | ____ | ||
| Import price | Domestic price | ||
| after tariff | 225 | after tariff | 225 |
Exhibit 4.2 In the absence of international trade, assume that the equilibrium price and quantity of motorcycles in Canada is $14,000 and 10 units respectively. Assuming that Canada is a small country that is unable to affect the world price of motorcycles, suppose its market is opened to international trade. As a result, the price of motorcycles falls to $12,000 and the total quantity demanded rises to 14 units; out of this total, 6 units are produced in Canada while 8 units are imported. Now assume that the Canadian government levies an import tariff of $1,000 on motorcycles.
Exhibit 4.2 In the absence of international trade, assume that the equilibrium price and quantity of motorcycles in Canada is $14,000 and 10 units respectively. Assuming that Canada is a small country that is unable to affect the world price of motorcycles, suppose its market is opened to international trade. As a result, the price of motorcycles falls to $12,000 and the total quantity demanded rises to 14 units; out of this total, 6 units are produced in Canada while 8 units are imported. Now assume that the Canadian government levies an import tariff of $1,000 on motorcycles.