The diagram below shows supply and demand curves for bicycles in the domestic Canadian market.Assume that all bicycles are identical.
FIGURE 34- 4
-Refer to Figure 34- 4.Suppose the world price of bicycles is $200 and Canada has in place a 50% tariff on this good.The deadweight loss to the Canadian economy resulting from this tariff is per year.

Question

The diagram below shows supply and demand curves for bicycles in the domestic Canadian market.Assume that all bicycles are identical.
  FIGURE 34- 4
-Refer to Figure 34- 4.Suppose the world price of bicycles is $200 and Canada has in place a 50% tariff on this good.The deadweight loss to the Canadian economy resulting from this tariff is per year.

Quizplus · Accepted Answer

The deadweight loss is the area of the triangle formed by the difference between the world price and the domestic price, multiplied by the quantity of imports. In this case, the world price is $200, the domestic price is $300, and the quantity of imports is 10,000. So the deadweight loss is (1/2) * (300 - 200) * 10,000 = $500,000.

The Diagram Below Shows Supply and Demand Curves for Bicycles