Figure 7.4 Suppose the Canadian Government Imposes a $0.50 Per Pound Tariff

Essay

Figure 7.4

Suppose the Canadian government imposes a $0.50 per pound tariff on sugar imports. Figure 7.4 shows the demand and supply curves for sugar and the impact of this tariff.
-Use Figure 7.4 to answer questions a-i.
a.Following the imposition of the tariff, what is the price that domestic consumers must now pay and what is the quantity purchased?
b.Calculate the value of consumer surplus with the tariff in place.
c.What is the quantity supplied by domestic sugar producers with the tariff in place?
d.Calculate the value of producer surplus received by Canadian sugar producers with the tariff in place.
e.What is the quantity of sugar imported with the tariff in place?
f.What is the amount of tariff revenue collected by the government?
g.The tariff has reduced consumer surplus.Calculate the loss in consumer surplus due to the tariff.
h.What portion of the consumer surplus loss is redistributed to domestic producers? To the government?
i.Calculate the deadweight loss due to the tariff.