The above figure shows the domestic supply of and domestic demand for an imported good. The world price is $15 per unit
a. At the world price of $15 per unit, what is the domestic consumption and domestic production?
b. At the world price of $15 per unit, what is the quantity imported?
c. If the government imposes a tariff of $5 per unit, what is the domestic consumption and domestic production?
d. With the $5 per unit tariff, what is the quantity imported?
e. How much revenue does the government collect with a tariff of $5 per unit?
a. Domestic consumption is 8 million units per year and domestic production is 0.
b. The quantity imported is 8 million units per year.
c. Domestic consumption is 6 million units per year and domestic production is 2 million units per year.
d. The quantity imported is 4 million units per year.
e. The government collects $5 per unit imported and 4 million units are imported, so the government's revenue from the tariff is $5 × 4 million = $20 million per year.
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You notice that the price and quantity of wheat both decrease. This observation can be the result of the
A) demand curve for wheat shifting rightward. B) demand curve for wheat shifting leftward. C) supply curve of wheat shifting rightward. D) supply curve of wheat shifting leftward.
Assuming price elasticity of demand is reported as an absolute value, an inelastic demand has a measured elasticity:
A. greater than zero. B. greater than one. C. less than one. D. exactly one.
If an excise tax is imposed on steak,
a. the government's tax revenue will decrease b. the government's tax revenue will increase c. the amount of steak produced and sold will increase d. the market price of steak will decrease e. the market price will rise but the market quantity will be unaffected
To answer, refer to the following: "Ford built 18 vehicles per auto employee in North America last year, while GM could only manage 12." (The Wall Street Journal) In comparison with GM, Ford had a higher
A. average product of labor. B. average product of capital. C. marginal product of capital. D. marginal product of labor.