The diagram below shows the domestic demand and supply curves for denim jeans in Canada.The prevailing world price is PW.Assume that all jeans are identical.
FIGURE 34- 2
-Refer to Figure 34- 2.Suppose Canada has free trade in jeans and then imposes a tariff of $t per pair.Canada's production will then be at the quantity

Question

The diagram below shows the domestic demand and supply curves for denim jeans in Canada.The prevailing world price is PW.Assume that all jeans are identical.
  FIGURE 34- 2
-Refer to Figure 34- 2.Suppose Canada has free trade in jeans and then imposes a tariff of $t per pair.Canada's production will then be at the quantity

Quizplus · Accepted Answer

Before the tariff, Canada produces Q2 jeans and imports Q3-Q2 jeans. With the imposition of the tariff, the domestic supply curve shifts up by the amount of the tariff, and the new domestic production is at Q1, which is where the new domestic supply curve intersects with the original world price PW. Therefore, the answer is B, Q2.

The Diagram Below Shows the Domestic Demand and Supply Curves