Tariff Question (1 Viewer)

[Kangaaroo]

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My answer was C, but the correct answer is D. Can anyone help out? (from 2011 HSC).

 

[ultra908]

previously, foreign producers fill the 300 quantity gap between supply and demand at $10, so revenue is $3000. With the tariff, foreign producers only fill a 100 quantity gap. While the price is $15, $5 goes directly to the government as 'government revenue'. So foreign producer revenue is only 100*$10=$1000.
Thus D.

 

[Kangaaroo]

previously, foreign producers fill the 300 quantity gap between supply and demand at $10, so revenue is $3000. With the tariff, foreign producers only fill a 100 quantity gap. While the price is $15, $5 goes directly to the government as 'government revenue'. So foreign producer revenue is only 100*$10=$1000.
Thus D.

Thanks