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. Does the tariff result in net gain or a net loss to society as a whole?

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