The diagram below shows the demand and supply curves for refrigerators in Canada.
FIGURE 34- 1
-Refer to Figure 34- 1. Suppose that P0 is the world price. If Canada imposes a tariff causing the price of refrigerators in Canada to rise from P0 to P1, the Canadian government will collect tariff revenues equal to
A) the new price, P1, multiplied by the total quantity of refrigerators purchased in Canada, Q4.
B) the original price P0, multiplied by the original quantity of refrigerators imported into Canada, Q1Q5.
C) (P1 - P0) multiplied by the tariff- induced quantity of refrigerators imported into Canada, Q1Q5.
D) (P1 - P0) multiplied by the tariff- induced quantity of refrigerators imported into Canada, Q2Q4.
E) the new price, P1, multiplied by the total quantity of refrigerators purchased in Canada, Q2.
Correct Answer:
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