The text estimated the deadweight loss of protection on Harley-Davidson motorcycles during the 1980s was about 3.8% of the annual value of imports or about $1,125.5 million over the four years that the tariffs were used. This estimate is based on this formula for the deadweight loss of a tariff, measured relative to the import value: Recalculate these deadweight losses, assuming that there were 200,000 comparable motorcycles imported before the tariff and 150,000 comparable motorcycles imported after the tariff was imposed; that average import sales were $800 million in each year the tariff was applied; and that the tariff was 50% over the four-year period (compared with the declining tariff of 45%, 35%, 20%, and 15% actually used over the four- year period).

Question

The text estimated the deadweight loss of protection on Harley-Davidson motorcycles during the 1980s was about 3.8% of the annual value of imports or about $1,125.5 million over the four years that the tariffs were used. This estimate is based on this formula for the deadweight loss of a tariff, measured relative to the import value:

Recalculate these deadweight losses, assuming that there were 200,000 comparable motorcycles imported before the tariff and 150,000 comparable motorcycles imported after the tariff was imposed; that average import sales were $800 million in each year the tariff was applied; and that the tariff was 50% over the four-year period (compared with the declining tariff of 45%, 35%, 20%, and 15% actually used over the four- year period).

The Text Estimated the Deadweight Loss of Protection on Harley-Davidson