Question

Draw a demand and supply curve for textiles in south Africa. Illustrate on the graph how specific import tariff will affect the price, quantities consumed imported and domestically produced

Answer 1

The demand for textiles is a downward-sloping curve, and the supply curve for textiles in south Africa is an upward-sloping curve, they intersect in equilibrium point. Specific import tariff will increase the price for textiles, decrease quantity consumed, decrease imported quantity, and increase domestically produced quantity.