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Chapter 32: Q.17 (page 730)

Based on your answer to Problem 32-16, what are the total tariff revenues of the U.S. government? What percentage do U.S. consumers ultimately pay because of a higher price generated by the tariff?

Short Answer

Expert verified

U.S. consumers pay50%tariff.

Step by step solution

01

Given Information

U.S buyers pay $25of the $50per unit tariff. While the Chinese tablet delivery firm pays $25of the$50 per unit tariff. Thusly, the tariff is similarly divided among the U.S purchasers and the Chinese table creating firms.

02

Explanation

The burden of a per-unit tariff expands the expense of Chinese-made tablets to U.S purchasers. This prompts a decrease in the stock.

We know,

Tariff revenue = Tariff ×Import quantity

=$50×8=$400

The amount US consumers pay is,

$25$50×100=50%

U.S. consumers pay50%tariff.

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