Refer to the figure below to answer the following questions.

The figure shows the market for shirts in Canada, where D is the domestic demand curve and S is the domestic supply curve. The world price is $20 per shirt. Canada imposes a tariff on imported shirts of $4 per shirt.
Figure 31.3.1
-Refer to Figure 31.3.1. With the tariff, Canada imports ________ million shirts per year.
A)24
B)8
C)32
D)16
E)40

Question

Refer to the figure below to answer the following questions.
  
The figure shows the market for shirts in Canada, where D is the domestic demand curve and S is the domestic supply curve. The world price is $20 per shirt. Canada imposes a tariff on imported shirts of $4 per shirt.
Figure 31.3.1
-Refer to Figure 31.3.1. With the tariff, Canada imports ________ million shirts per year.
A)24 
B)8 
C)32 
D)16 
E)40

Quizplus · Accepted Answer

With the tariff, the domestic price will be $24 per shirt ($20 world price + $4 tariff). At this price, domestic suppliers will produce 16 million shirts and domestic consumers will demand 32 million shirts. The difference (32-16=16) is the amount that Canada will import with the tariff. Therefore, the answer is option D.

Refer to the Figure Below to Answer the Following Questions