Consider a market in a small country with a domestic demand curve of P = 60 -2q and P = q.The world price for the good is $5.The government imposes an import tariff of $10 per unit, what is the tariff revenue collected by the government?

Question

Quizplus · Accepted Answer

The domestic supply curve is P = q, and the domestic demand curve is P = 60 - 2q. With a world price of $5 and a $10 tariff, the effective price is $15. At P = 15, domestic supply is q = 15, and domestic demand is q = 22.5. Imports are 22.5 - 15 = 7.5 units. Tariff revenue is 7.5 units * $10 = $75.

Consider a Market in a Small Country with a Domestic