The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country.
Figure 20.2

-In Figure 20.2, if the world price per bushel of wheat is $25 and a tariff of $10 is imposed by the domestic government, what is the domestic demand?

Question

The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country.
Figure 20.2
 
-In Figure 20.2, if the world price per bushel of wheat is $25 and a tariff of $10 is imposed by the domestic government, what is the domestic demand?

Quizplus · Accepted Answer

When the world price is $25 per bushel, the domestic demand for wheat is given by the point where the demand curve intersects the price line ($25). Without a tariff, this would be at point A, which corresponds to a quantity demanded of 400 bushels. 
However, with a $10 tariff, the price faced by domestic consumers increases to $35 per bushel. This is shown by the parallel shifted demand curve from D to D'. The domestic demand is now given by the point where D' intersects the new price line of $35, which is at point B. At this point, the quantity demanded is still 400 bushels. Thus, the answer is A) 400 bushels.

The Figure Given Below Depicts the Negatively Sloped Demand and Positively