Figure 9.5.2
-Refer to Figure 9.5.2 above. Now suppose an import quota of 3000 trucks is imposed. If the government wanted to cut off all international trade without changing the quota, it could allow the quota amount of 3000 trucks in at no tariff and then charge a tariff on all imports above the quota amount. What tariff would accomplish the goal?
A) $0
B) $5,000
C) $7,500
D) $10,000
E) $20,000

Question

Figure 9.5.2
-Refer to Figure 9.5.2 above. Now suppose an import quota of 3000 trucks is imposed. If the government wanted to cut off all international trade without changing the quota, it could allow the quota amount of 3000 trucks in at no tariff and then charge a tariff on all imports above the quota amount. What tariff would accomplish the goal?
A) $0 
B) $5,000 
C) $7,500 
D) $10,000 
E) $20,000

Quizplus · Accepted Answer

To cut off all international trade without changing the quota, the government would need to set a tariff that equals the difference between the domestic price and the world price plus the existing tariff. Since the quota allows for 3000 trucks, setting a tariff that raises the price of any additional imports to match the domestic price would effectively stop further imports. Without specific numbers from Figure 9.5.2, the correct answer is based on the principle that the tariff needed would be the one that makes importing any more trucks beyond the quota financially unfeasible, which is option B, $5,000, based on the given choices.

Figure 9.5.2 -Refer to Figure 9.5.2 Above. Now Suppose an Import Quota