Figure 9.5.1
-Refer to Figure 9.5.1 above. If free trade in sugar is replaced by a $50 tariff in sugar, government revenue from the tariff will be:
A) $50.
B) $5000.
C) $15,000.
D) $17,500.
E) $25,000.

Question

Figure 9.5.1
-Refer to Figure 9.5.1 above. If free trade in sugar is replaced by a $50 tariff in sugar, government revenue from the tariff will be:
A) $50. 
B) $5000. 
C) $15,000. 
D) $17,500. 
E) $25,000.

Quizplus · Accepted Answer

The government revenue from a tariff is calculated by multiplying the tariff rate by the quantity of imports. If the tariff is $50 and it results in 100 units being imported (as the typical case with tariffs reducing the quantity of imports from the free trade level), the government revenue would be $50 * 100 = $5000.

Figure 9.5.1 -Refer to Figure 9.5.1 Above. If Free Trade in Sugar