Figure 9.5.1
-Refer to Figure 9.5.1 above. In order to eliminate international trade in sugar altogether, this country would have to impose a tariff of:
A) $25.
B) $50.
C) $75.
D) $150.
E) $175.

Question

Figure 9.5.1
-Refer to Figure 9.5.1 above. In order to eliminate international trade in sugar altogether, this country would have to impose a tariff of:
A) $25. 
B) $50. 
C) $75. 
D) $150. 
E) $175.

Quizplus · Accepted Answer

The equilibrium price of sugar without any trade is $225 per tonne. However, the world price of sugar is only $150 per tonne. Therefore, to eliminate international trade in sugar altogether and make domestic sugar producers competitive, this country would need to impose a tariff equal to the difference between the world price and the equilibrium price, which is $75 per tonne ($225 - $150). Thus, the best choice is C) $75.

Figure 9.5.1 -Refer to Figure 9.5.1 Above. in Order to Eliminate International