4. The demand curve for tea is Q 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. = 250 - 10P in Canada. Q is quantity in millions of a. If the tariff is imposed, how much will consumers pay for a pound of tea? What is the quantity demanded? b. Calculate the lost consumer surplus. c. Calculate the tax revenue collected by the government. d. Does the tariff result in a net gain or a net loss to society as a whole?

4. The demand curve for tea is Q 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. = 250 - 10P in Canada. Q is quantity in millions of a. If the tariff is imposed, how much will consumers pay for a pound of tea? What is the quantity demanded? b. Calculate the lost consumer surplus. c. Calculate the tax revenue collected by the government. d. Does the tariff result in a net gain or a net loss to society as a whole?

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter16: Government Regulation

Section: Chapter Questions

Problem 10E

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