The demand and supply curves are easy. The distinction between movements vs shifts is slightly less easy, but still manageable. What's *NOT* easy is drawing this stuff using slashes and back-slashes and have it all line up correctly. HOW DOES HE DO IT?
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Good to see your demand curve now sloping downward!
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this graph is making the small-country assumption though, which the US is almost certainly not for most goods...basically what I'm saying is that the 100% pass through is probably a more interesting finding than it seems on the surface
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I don’t buy it is proof that its 100%. I read first 20 pp & the 12 month comparison runs into other factors: inputs, obsoloscence prod development. Even if comparing non tarriff to tarriff. There was also forward buying and ongoing resourcing so burdrn sharing less important.
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Imagine getting a phd in econ only to have the current state of affairs force you to write a whole paper about this super basic concept.
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True. But this is an atrocity on moblie.
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This is a work of art.
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Nice but there's no profit in that diagram. This means the cost of the tariff cannot come out of profits. Also, I'm not a hug fan of tariffs but the above is key and missing.
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Profit is there, although it's a bit hidden. The triangle formed by price, the y-axis, and the domestic supply is producer surplus. Not quite the same thing as profit but they're very closely linked. In this simple diagram, actually, domestic profits increase with the tariff.
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P
| \ /Domestic supply
| \ /
| X
| ---
-\----World price +
tariff
| / \ ↑
|-
------\-- Old world price
| Domestic demand
————————Q
↑Tariff => 
