Before Cyprus joined the EU there was an import tariff on imported fresh meat from the EU of €1.00 per Kg at a selling price of €6.00 per kg. The total annual Demand was 20m kgs (20,000tons) per year while when the tariff was lifted (after the accession to the EU) the annual demand increased to 260m kgs (260,000tons). At the €6.00 per kg price, domestic supply has been half of the total annual supply while when the tariff was lifted this was reduced by 20%. Calculate: The total increase in consumer surplus due to the abolition of the tariff. The total amount of the tariff revenue that had been lost. The change in the domestic and foreign producer surplus.
Before Cyprus joined the EU there was an import tariff on imported fresh meat from the EU of €1.00 per Kg at a selling price of €6.00 per kg. The total annual Demand was 20m kgs (20,000tons) per year while when the tariff was lifted (after the accession to the EU) the annual demand increased to 260m kgs (260,000tons). At the €6.00 per kg price, domestic supply has been half of the total annual supply while when the tariff was lifted this was reduced by 20%. Calculate: The total increase in consumer surplus due to the abolition of the tariff. The total amount of the tariff revenue that had been lost. The change in the domestic and foreign producer surplus.
Chapter1: Making Economics Decisions
Section: Chapter Questions
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Before Cyprus joined the EU there was an import tariff on imported fresh meat from the EU of €1.00 per Kg at a selling
Calculate:
- The total increase in
consumer surplus due to the abolition of the tariff. - The total amount of the tariff revenue that had been lost.
- The change in the domestic and foreign
producer surplus .
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