The United States has historically imposed import tariffs on goods that include tobacco, canned tuna, steel, and aluminum. Suppose the market for tobacco is illustrated by the accompanying graph.a. As shown, the world price is $2 per pound. Suppose the U.S. imposes a tariff of $1 per pound. Adjust the price line labeled "World price with tariff" (at the top of the graph) to reflect this tariff. b. Use the letters and values in the graph to fill in the following table. Without tariffWith import tariffPrice Quantity demanded Quantity supplied Domestic consumer surplus Domestic producer surplus Government revenue Total economic surplus c. If the government decides to replace the tariff with a quota that will have the same effect on the market as the tariff, the quota should restrict imports to____________________( 1million pounds, 2 million pounds, 4 million pounds or 6 million pounds) The United States has historically imposed import tariffs on goods that include tobacco, canned tuna, steel, and aluminum.Suppose the market for tobacco is illustrated by the accompanying graph.World price with tariffDomestic supplyAGBEDWorld priceP.1Domestic demandRU367Quantity (millions of pounds)(punod aad s) asud

Answered: The United States has historically…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The United States has historically imposed import tariffs on goods that include tobacco, canned tuna, steel, and aluminum. Suppose the market for tobacco is illustrated by the accompanying graph.

a. As shown, the world price is $2 per pound. Suppose the U.S. imposes a tariff of $1 per pound. Adjust the price line labeled "World price with tariff" (at the top of the graph) to reflect this tariff.

b. Use the letters and values in the graph to fill in the following table.

	Without tariff	With import tariff
Price
Quantity demanded
Quantity supplied
Domestic consumer surplus
Domestic producer surplus
Government revenue
Total economic surplus

c. If the government decides to replace the tariff with a quota that will have the same effect on the market as the tariff, the quota should restrict imports to____________________( 1million pounds, 2 million pounds, 4 million pounds or 6 million pounds)

The United States has historically imposed import tariffs on goods that include tobacco, canned tuna, steel, and aluminum.
Suppose the market for tobacco is illustrated by the accompanying graph.
World price with tariff
Domestic supply
A
G
B
E
D
World price
P.
1
Domestic demand
R
U
3
6
7
Quantity (millions of pounds)
(punod aad s) asud

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