Refer to the figure below to answer the following questions. Figure 7.3.1
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.
-Refer to Figure 7.3.1.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.  Figure 7.3.1
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.
-Refer to Figure 7.3.1.With the tariff,Canada imports ________ million shirts per year.
A)24 
B)8 
C)32 
D)16 
E)40

Quizplus · Accepted Answer

Before the tariff, Canada imported 32 million shirts at the world price of $20 per shirt. After the tariff, the domestic price increases to $24 per shirt, which is higher than the world price. As a result, Canada reduces its imports to 16 million shirts. This can be seen by following the new quantity demanded and quantity supplied at the new domestic price of $24 along the demand and supply curves. Therefore, the answer is D)16.

Refer to the Figure Below to Answer the Following Questions