Suppose that, as part of an international trade agreement, the U.S. government reduces the tariff on imported coffee
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Description
A key skill in economics is the ability to use the theory of supply and demand to analyze specific markets. In this weeks discussion, you get a chance to demonstrate your ability to analyze the effects of several shocks to the market for coffee. Choose one of the three scenarios below. Scenario 1: Suppose that, as part of an international trade agreement, the U.S. government reduces the tariff on imported coffee. Will this affect the supply or the demand for coffee? Why? Which determinant of demand or supply is being affected? Show graphically with before- and after-curves on the same axes. How will this change the equilibrium price and quantity of coffee? Explain your reasoning.
If this will affect the supply or the demand for coffee Yessimply because the foreign firms...