Questions about course content for PubPol/Econ 541, Fall 2024 11/3 Q: I have a question for Paper 2 regarding how tariffs affect the price of imported bicycles. Should the retail price increase due to a tariff match the tariff rate (e.g., a 30% tariff leading to a 30% price increase), or could it differ based on maybe other factors? A: We don't have any information to determine that pass-through, except perhaps to assume zero pass-through. I think I'd choose to assume, as you say, "a 30% tariff leading to a 30% price increase." 11/2 Q: The first question is the domestic demand for Bicycles. From Q&A, the domestic demand should be the sum of imports and domestic production. However, I think the volume of sales can also be seen as domestic demand. Which one is better?  A: Volume of sales sounds reasonable to me too.  Q: The second question is the price level. Could the import unit value be the world price level? The price baseline is the unit value in 2004. A: Yes.  Q: I also want to ensure that our group needs to calculate the influence of tax on imports for each year at different tax levels(30%, 25%, 20%). A: Yes.  I'm not sure why you were unsure about that.  Q: The CITT document mentions parts that could be exempt from the tax, such as bicycles that cost more than $400 or come from trade agreement partners and low-share countries. We don't have to think about these in our model, right? A: Right.  You don't have to think about those complications unless you want to. 10/31 Questions on Paper 2: Q: For finding quantity demanded from the CITT report, am I right to assume Q(d) = net imports + total domestic production? Or would it be Q(d) = total apparent imports + total domestic production? I am not sure what the difference between the two is, or if it matters in the long run. A: I don't know the difference either, so either is fine. Q: For all the numbers, can/should we round? For example, if Canadian bicycle suppliers produced 480,878 units in 2004, can we round that number to 481,000 for the purpose of our calculations? A: I regret not thinking to answer this when I first mentioned rounding, as I now think some of the small variation in answers that I've gotten from papers may be due to this. I meant to round numbers only for what your report in your paper. In a spreadsheet there is no reason I can think of not to use the numbers you are given. Q: I understand we need to conduct sensitivity analysis for both elasticity of supply and demand. We also need to calculate the tariff impacts for all three years. Do I have it right that, at least in our appendix, we should report welfare effects for all of the sensitivity options (9 potential "effects," depending on the sensitivity for each year)? In the paper, given the page limit, should we focus on baseline but discuss the high and low end sensitivities? A: No, I don't think you need to report that much detail. Just pick one or a few of your important results and report how they vary with different elasticities. The question is, how much does your uncertainty about elasticities matter, and that will be enough to convey that. Q: For labor in the CITT, can we assume baseline labor of 637 for all 3 years? For example, if I am calculating the labor effects for year 2 of the tariff (25%), do I use 637 as my baseline, or do I use the year 1 of the tariff (30%) labor effect as my baseline? A: I would use the baseline labor for all three years. That is simplest, and I'm pretty sure that if I thought more about it, I could argue that it is more correct.