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.With the tariff in place,the United States produces
A)18 million pounds of coffee.
B)20 million pounds of coffee.
C)26 million pounds of coffee.
D)38 million pounds of coffee.

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.With the tariff in place,the United States produces
A)18 million pounds of coffee. 
B)20 million pounds of coffee. 
C)26 million pounds of coffee. 
D)38 million pounds of coffee.

Quizplus · Accepted Answer

With the tariff in place, the domestic price of coffee is $2.50 per pound. At this price, domestic producers are willing to supply 20 million pounds of coffee. However, domestic consumers are only willing to demand 18 million pounds of coffee at this price. The difference between domestic supply and demand is 2 million pounds, which is imported from abroad.