Figure 9-2
The following diagram shows the domestic demand and domestic supply in a market.In addition,assume that the world price in this market is $40 per unit.
-Refer to Figure 9-2.Suppose the government imposes a tariff of $20 per unit.The amount of revenue collected by the government from the tariff is

Question

Figure 9-2
The following diagram shows the domestic demand and domestic supply in a market.In addition,assume that the world price in this market is $40 per unit. 
-Refer to Figure 9-2.Suppose the government imposes a tariff of $20 per unit.The amount of revenue collected by the government from the tariff is

Quizplus · Accepted Answer

After the tariff of $20 per unit is imposed, the domestic price rises to $60 per unit ($40 + $20). At this price, domestic producers increase their output to 300 units and domestic consumers decrease their consumption to 200 units. The quantity imported falls to 100 units (400 - 200 - 300). The government collects revenue from the tariff for each of these 100 units, which is $20 per unit. Therefore, the total revenue collected by the government is $2,000 ($20 x 100) per year. Over the course of 6 years, the total revenue collected by the government from the tariff is $12,000.

Figure 9-2 The Following Diagram Shows the Domestic Demand and Domestic Supply