Quantify the effects of a country’s tariff on sugar Situation with import tariffEstimated situation without tariffWorld price$0.10per pound$0.10per poundTariff$0.02per pound0Domestic price$0.12per pound$0.10per poundDomestic consumption (billions of pounds per year)2022Domestic production (billions of pounds per year)86Imports (billions of pounds per year)1216Calculate the following measures:• The domestic consumers’ gain from removing the tariff. • The domestic producers’ loss from removing the tariff. • The government tariff revenue loss.• The net effect on national well-being.

The objective of this question is to understand the impact of removing a tariff on sugar in a…

Answered: Quantify the effects of a country’s…

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter19: International Trade

Section: Chapter Questions

Problem 2.5P

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Question

Quantify the effects of a country’s tariff on sugar

	Situation with import tariff	Estimated situation without tariff
World price	$0.10per pound	$0.10per pound
Tariff	$0.02per pound	0
Domestic price	$0.12per pound	$0.10per pound
Domestic consumption (billions of pounds per year)	20	22
Domestic production (billions of pounds per year)	8	6
Imports (billions of pounds per year)	12	16

Calculate the following measures:
• The domestic consumers’ gain from removing the tariff. • The domestic producers’ loss from removing the tariff. • The government tariff revenue loss.
• The net effect on national well-being.

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