4. The demand curve for tea is Q pounds and P is the market price per pound of tea. Suppose that Canada is importing all of its tea demanded. Foreign producers can ship tea to Canadian distributors at a constant marginal (= average) cost of $8 per pound, and Canadian distributors can in turn distribute tea for a constant $2 per pound. The Canadian tea market is competitive. Government is considering to impose a tariff on tea imports of $2 per pound. = 250 - 10P in Canada. Q is quantity in millions of a. If the tariff is imposed, how much will consumers pay for a pound of tea? What is the quantity demanded? b. Calculate the lost consumer surplus. c. Calculate the tax revenue collected by the government. d. Does the tariff result in a net gain or a net loss to society as a whole?
4. The demand curve for tea is Q pounds and P is the market price per pound of tea. Suppose that Canada is importing all of its tea demanded. Foreign producers can ship tea to Canadian distributors at a constant marginal (= average) cost of $8 per pound, and Canadian distributors can in turn distribute tea for a constant $2 per pound. The Canadian tea market is competitive. Government is considering to impose a tariff on tea imports of $2 per pound. = 250 - 10P in Canada. Q is quantity in millions of a. If the tariff is imposed, how much will consumers pay for a pound of tea? What is the quantity demanded? b. Calculate the lost consumer surplus. c. Calculate the tax revenue collected by the government. d. Does the tariff result in a net gain or a net loss to society as a whole?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
![The demand curve for tea is Q = 250 - 10P in Canada. Q is quantity in millions of
pounds and P is the market price per pound of tea. Suppose that Canada is importing
all of its tea demanded. Foreign producers can ship tea to Canadian distributors at a
constant marginal (= average) cost of $8 per pound, and Canadian distributors can
in turn distribute tea for a constant $2 per pound. The Canadian tea market is
competitive. Government is considering to impose a tariff on tea imports of $2 per
pound.
a. If the tariff is imposed, how much will consumers pay for a pound of tea? What is"
the quantity demanded?
b. Calculate the lost consumer surplus.
4.
c. Calculate the tax revenue collected by the government.
d. Does the tariff result in a net gain or a net loss to society as a whole?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F9685979b-d5ca-497f-8e60-56dd7e852900%2F0fa4434c-2205-4119-9abf-0da428722b28%2Ffy7bacp_processed.jpeg&w=3840&q=75)
Transcribed Image Text:The demand curve for tea is Q = 250 - 10P in Canada. Q is quantity in millions of
pounds and P is the market price per pound of tea. Suppose that Canada is importing
all of its tea demanded. Foreign producers can ship tea to Canadian distributors at a
constant marginal (= average) cost of $8 per pound, and Canadian distributors can
in turn distribute tea for a constant $2 per pound. The Canadian tea market is
competitive. Government is considering to impose a tariff on tea imports of $2 per
pound.
a. If the tariff is imposed, how much will consumers pay for a pound of tea? What is"
the quantity demanded?
b. Calculate the lost consumer surplus.
4.
c. Calculate the tax revenue collected by the government.
d. Does the tariff result in a net gain or a net loss to society as a whole?
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