The diagram below shows the domestic demand and supply curves for cotton towels in Canada.The prevailing world price of cotton towels is P W .Assume that all cotton towels are identical. FIGURE 33-3
-Refer to Figure 33-3.If Canada imposes a tariff of $t per cotton towel,the Canadian government's tariff revenues will be equal to the area

Question

The diagram below shows the domestic demand and supply curves for cotton towels in Canada.The prevailing world price of cotton towels is P W .Assume that all cotton towels are identical.  FIGURE 33-3
-Refer to Figure 33-3.If Canada imposes a tariff of $t per cotton towel,the Canadian government's tariff revenues will be equal to the area

Quizplus · Accepted Answer

The tariff revenue for the government is calculated as the tariff rate ($t) multiplied by the quantity of imports after the tariff is imposed. In the context of a supply and demand diagram, this is represented by the area of a rectangle where the height is the tariff ($t) and the width is the quantity of imports, which corresponds to area C.

The Diagram Below Shows the Domestic Demand and Supply Curves