Figure 9.8
-Refer to Figure 9.8. In order to eliminate international trade in sugar altogether, this country would have to impose a tariff of
A) $25.
B) $50.
C) $75.
D) $150.
E) $175.

Question

Figure 9.8
-Refer to Figure 9.8. In order to eliminate international trade in sugar altogether, this country would have to impose a tariff of
A) $25. 
B) $50. 
C) $75. 
D) $150. 
E) $175.

Quizplus · Accepted Answer

To eliminate international trade in sugar altogether, the domestic price would have to be equal to the world price. The world price is $100 per ton, and the domestic price with no trade is $50 per ton. Therefore, the tariff needed to raise the domestic price by $50 to equal the world price would be $75 ($50 in additional cost plus $25 in lost revenue from the quota).

Figure 9.8 -Refer to Figure 9.8. in Order to Eliminate International Trade