Tariffs. The Manchester Shoe Corporation is an importer and distributor of foreign-made footwear that is sold at popular prices in leading discount retailers. The U.S. Commerce Department recently informed the company that it will be subject to a new 25% tariff on the import cost of rubberized footwear originating from China. The company is concerned that the tariff will slow its sales growth, given the highly competitive nature of the footwear market where wholesale prices are stable at $5 per unit. Relevant total cost (TC) and marginal cost (MC) relations for this product are:

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The Answer of Tariffs. The Manchester Shoe Corporation is an importer and distributor of foreign-made footwear that is sold at popular prices in leading discount retailers. The U.S. Commerce Department recently informed the company that it will be subject to a new 25% tariff on the import cost of rubberized footwear originating from China. The company is concerned that the tariff will slow its sales growth, given the highly competitive nature of the footwear market where wholesale prices are stable at $5 per unit. Relevant total cost (TC) and marginal cost (MC) relations for this product are:

Tariffs the Manchester Shoe Corporation Is an Importer and Distributor