Question 1:
a) Describe the basic idea of producer surplus.
b) Describe the idea with the help of the graphical exercise.
Question 2: By using the help of consumer surplus, resolve the water-diamond paradox.
Question 3: Describe in details, the different uses of consumer’s surplus.
Question 4:
a) Describe the idea of tariff.
b) How is it dissimilar from quota?
c) Describe the logic as to why a tariff is imposed?
Question 5:
a) Describe in detail, the main effects of tariff.
b) Illustrate that the welfare declines for a tariff imposing country.
c) Describe the economic interpretation of total loss?