Country A imports 1,000 cars per month.After imposing a $50 per car tariff,imports fall to 800 cars per month.How much does Country A's government collect in tariff revenue?

Question

Quizplus · Accepted Answer

The tariff is $50 per car and imports fell by 200 cars per month. So the total revenue collected per month is:

$50 x 200 = $10,000

However, tariff revenue is collected on each imported car, so to get the total revenue collected we need to multiply the revenue per car by the total number of imported cars per month:

$10,000 x 1,000/800 = $12,500

This is the monthly tariff revenue. To get the annual tariff revenue, we can multiply it by 12:

$12,500 x 12 = $150,000

Therefore, the closest answer choice is C) $40,000.

Country a Imports 1,000 Cars Per Month