Assume the small-country model is applicable. If the world price of the product is $6 and a tariff of $1 per unit is applied to
imports of the product, then the total revenue (after tariff) going to domestic producers would be ________ and the total revenue (after tariff) going to foreign producers would be ________.
Assume the small-country model is applicable. If the world price of the product is $6 and a tariff of $1 per unit is applied to imports of the product, then the total revenue (after tariff) going to domestic producers would be $11,200, and the total revenue (after tariff) going to foreign producers would be $2,400
This strategic move will positions Zenovia Incorportation to enjoy and benefit from economic arbitrage. Economic arbitrage refers to simultaneous buying and selling of an asset or a product in order to make profit from the price difference. Arbitrage strategy profits by exploiting the price differences of a particular product in different markets.
