(Figure: U.S.Imports from Mexico and Asia) With the $100 tariff,
The United States will import ______ from Mexico and _______
From China.

Question

Quizplus · Accepted Answer

With a $100 tariff, the new prices for Mexican and Asian goods are $300 and $500 respectively. The United States will import 250 units from each country since the world price is $200 and both countries have the same tariff-inclusive price ($300 for Mexico and $500 for Asia). Thus, the answer is (B) 250 from Mexico and 250 from China.