Assume there is a 35 percent tariff on bananas imported into the United States.Also,assume that the market competition is at its beginning and the law of one price is not in effect.If the domestic market price of Hawaiian bananas is $1.00 per bunch,imported bananas will sell for ________ per bunch.

Question

Quizplus · Accepted Answer

With a 35 percent tariff on imported bananas, the price of imported bananas will be 135 percent of the original price. Therefore, if the domestic price of Hawaiian bananas is $1.00 per bunch, the imported bananas will sell for $1.35 per bunch (1.00 x 1.35 = 1.35).

Assume There Is a 35 Percent Tariff on Bananas Imported