Using the UAE\'s production, import and consumption of chicken meat data and inf

Question

Using the UAE's production, import and consumption of chicken meat data and information solve the below problems and submit the assignment to blackboard. Due date is June 9 by mid night In 2017 the total domestic demand for chicken meat in the UAE was 400,000 Tonnes, out of which 12.5% of the supply was from domestic production while 87.5% is from import. Suppose that the UAE government imposes 5%. Following the imposition of tariff, it is estimated that domestic production increases by 10% while import reduces by 15%. Total consumption demand is met by domestic supply and foreign import. 1) Determine the effect of tariff on consumers (15 2) Determine the effect of tariff on producers (0.5 3) Determine the effect of tariff on government income 4) Determine the net welfare effect of the tariff on the 5) Determine the economic inefficiency as a result of 6) What is the overall effect of the tariff on the UAE 7) Use a graph to illustrate the solution (0.5) points) points) (0.25) country (0.50) the import tariff (0.5) economy. Explain (0.25)

Explanation / Answer

As we know, a tariff is a like a tax on imported goods and services.

1)

For consusmers, imposition of tariff means higher import prices which mean higher prices for goods. Thus, the consumers are worse off since they have to pay a higher price for imports.

2)

With a tariff in place, imported goods cost more. This decreases pressure on domestic producers to lower their prices. Thus, they gain from the imposition of import duties.

3)

The government will see an increase in revenue from import duties. For example, If a country produces no oil, levying a tax on oil imports will raise money as people have no alternative put to pay the import tariff.

4)

The Net Welfare effect of the imposition of tariff on a country will be favourable. The most common reason for a tariff. Imposing tariffs makes domestic firms more competitive.The government also enjoys higher revenue. It is only the consumers who are worse off, thus the net welfare effect is mostly favourable.

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