Suppose that the world price of resins is $100 per ton. Now suppose that the United States imposes a 10% tariff on imported resins. What is the U.S. domestic price of resins after the 10% tariff is imposed (rounded to the nearest dollar) if exporters bear half of the tariff?
A) $90
B) $100
C) $105
D) $95

Question

Quizplus · Accepted Answer

With a 10% tariff on imports, the price of imported resins will increase from $100 to $110 per ton (i.e., a 10% increase on the original price). Since exporters bear half of the tariff, they will have to pay $5 per ton ($110-$100/2) and the U.S. domestic price of resins will increase to $105 per ton (i.e., $100 + $5).

Suppose That the World Price of Resins Is $100 Per