08 Jul CLA 1 Comprehensive learning Assessment I – (CLOs covered : CLO 1,
CLA 1 Comprehensive learning Assessment I – (CLOs covered : CLO 1, CLO 2, CLO 3)(a) Using a demand/supply diagram, illustrate and explain the effects of the imposition of an export tax on a good Y by a home country’s government on (i) the home country’s consumers of Y, (ii) the home country’s producers of Y, and (iii) the home government’s tax revenues. (Assume that the country is a ‘small” country.) Then evaluate the ‘net welfare effect” of the tax on the country. Why might a country want to impose an export tax? Explain.(b) Suppose now that the country imposing the export tax in part (a) of this question is a ‘large” country rather than a ‘small” country. Is it an advantage or a disadvantage for a country to be ‘large” rather than ‘small” when it imposes an export tax? Explain.
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