Eat This, Not.ips and More CcD Connect Login N Question 9 4 pts Price (dols por

Question

Eat This, Not.ips and More CcD Connect Login N Question 9 4 pts Price (dols por Tat) I5 t Sus 10 Dus 20 545 60 Quantity (millions of T-shirts per year) The figure above shows the U.S. market for T-shirts, where Sus is the domestic supply curve and Dus is the domestic demand curve. The world price of a T-shirt is $5. The U.S. government imposes a $2 per unit tariff on imported T-shirts The fgure above shows that the government revenue from the tariffis $20 million per year. zero $55 million per year $30 million per yean $15 million per year.

Explanation / Answer

Option (1).

With tariff, domestic price is $7 at which, quantity demanded is 45 million and quantity supplied is 35 million, so

Import (Million) = 45 - 35 = 10

Tariff revenue = Unit tariff x Imports = $2 x 10 million = $20 million

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