Car Sales Go Up as Prices Tumble Car affordability [in Australia] is now at its best in 20 years, fueling a surge in sales as prices tumble. ... [In 2000, Australia cut the tariff to 15 percent and]...

Car Sales Go Up as Prices Tumble


Car affordability [in Australia] is now at its best in 20 years, fueling a surge in sales as prices tumble. ... [In 2000, Australia cut the tariff to 15 percent and] on January 1, 2005, the tariff on imported vehicles fell from 15 percent to 10 percent.

a. Explain who gains and who loses from the lower tariff on imported cars.

b. Draw a graph to show how the price of a car, the quantity bought, the quantity produced in Australia, and imports of cars changed.