The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country.Figure 21.2

-According to Figure 21.2, if the world price of wheat is $25, and a tariff of $10 is imposed by the domestic government, the total tariff revenue collected by the government is:

Question

The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country.Figure 21.2
 
-According to Figure 21.2, if the world price of wheat is $25, and a tariff of $10 is imposed by the domestic government, the total tariff revenue collected by the government is:

Quizplus · Accepted Answer

When the world price of wheat is $25, the domestic demand is equal to 60 and domestic supply is equal to 20. With the $10 tariff, the domestic price of wheat will increase to $35. At this price, domestic demand decreases to 40, while domestic supply increases to 40. Therefore, quantity imported becomes 0. 
The total tariff revenue collected by the government is equal to the amount of tariff collected per unit of imported good multiplied by the quantity imported. 
Thus, the total tariff revenue collected by the government is: 
$10 x 20 = $2000.

The Figure Given Below Depicts the Negatively Sloped Demand and Positively