Figure 9.10 shows the market for cloth in Smith Island.

-Refer to Figure 9.10 to answer this question.If Smith Island introduced a tariff of $10 on cloth,how much would be imported?

Question

Figure 9.10 shows the market for cloth in Smith Island.
 
-Refer to Figure 9.10 to answer this question.If Smith Island introduced a tariff of $10 on cloth,how much would be imported?

Quizplus · Accepted Answer

When a tariff is introduced, the price of the imported good increases. In this case, the price of cloth would increase from $40 to $50 per unit. As a result, the quantity of cloth demanded by consumers would decrease from 40 units to 30 units, indicated by the movement along the demand curve. The quantity supplied by domestic producers would increase from 0 units to 20 units, indicated by the movement along the supply curve. The difference between the quantity demanded and the quantity supplied is the amount of cloth imported, which is equal to 20 units. Therefore, the answer is C) 20 units.

Figure 910 Shows the Market for Cloth in Smith Island