Figure 7-2 Suppose the U.S.government imposes a $0.75 per pound tariff on coffee imports.Figure 7-2 shows the impact of this tariff.
-Refer to Figure 7-2.If the tariff was replaced by a quota which limited coffee imports to 12 million pounds,the amount of revenue received by coffee importers would equal

Question

Figure 7-2  Suppose the U.S.government imposes a $0.75 per pound tariff on coffee imports.Figure 7-2 shows the impact of this tariff.
-Refer to Figure 7-2.If the tariff was replaced by a quota which limited coffee imports to 12 million pounds,the amount of revenue received by coffee importers would equal

Quizplus · Accepted Answer

From Figure 7-2, we can see that with the $0.75 per pound tariff, the quantity of coffee imported is reduced to 12 million pounds. If this quantity was limited by a quota, the price of coffee would increase to $3, and the revenue received by coffee importers would be $3 × 12 million = $36 million. Therefore, the correct answer is choice C.