The domestic demand and supply for oranges in Canada is outlined in the graph. The world price is $7 and Canada is open to free trade. Suppose Canada wants to reduce imports by 160 units per by using a a) Plot the following items on the graph: 1. New price line with the tariff 2. The area of the government revenue from the tariff -Price with Tariff Price per unit 27 24 21- 18 15 12

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Chapter1: Making Economics Decisions
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A5

The domestic demand and supply for oranges in Canada is outlined in the graph. The world price is $7 and Canada is open to free trade. Suppose Canada wants to reduce imports by 160 units per
period by using a tariff.
a) Plot the following items on the graph:
1. New price line with the tariff.
2. The area of the government revenue from the tariff.
Price with Tariff
Price per unit
27
24
21-
18
15-
12
9
6
3
World Price
100 200 300 400 500 600 700 800
Quantity per period
Reset
b) What quantity is being imported before the introduction of the tariff?
Quantity Imported = 0
c) What is the tariff Canada should impose, and what is the total revenue collected by the government from the tarif?
Taff
-$0
Total Revenue $0
Transcribed Image Text:The domestic demand and supply for oranges in Canada is outlined in the graph. The world price is $7 and Canada is open to free trade. Suppose Canada wants to reduce imports by 160 units per period by using a tariff. a) Plot the following items on the graph: 1. New price line with the tariff. 2. The area of the government revenue from the tariff. Price with Tariff Price per unit 27 24 21- 18 15- 12 9 6 3 World Price 100 200 300 400 500 600 700 800 Quantity per period Reset b) What quantity is being imported before the introduction of the tariff? Quantity Imported = 0 c) What is the tariff Canada should impose, and what is the total revenue collected by the government from the tarif? Taff -$0 Total Revenue $0
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