The Unted States produces beef and also imports beet trom ather countries. The g

Question

The Unted States produces beef and also imports beet trom ather countries. The graph to the r show the supply and demand for beet n the unded States, unter the assumpton that the Unted States can mport as "uch as wants at the world proe of beet wth causing the world price of beet to increase sus a How much beef does the Unted States import at the world price(WPy? mion pounds of beet (enter a whole number) on beet of to so a pound How much beet b.Nuw suppose "sa". Unted Slates now imported -ses a tar milion pounds of beet (ender a whole number) e. Do domestic producers of beet gain or lose when the United Siales imposes a tane on bee O Lose d. Does the government gain or lose when the Unted States imposes a tant on beet Dus O Gain s00 00900 1000 .onaons of bs)

Explanation / Answer

(a) At WP = $2, Domestic demand = 1000 and Domestic supply = 500

Import = Domestic demand - Domestic supply = 1000 - 500 = 500

(b) At (WP+t) = $2.5, Domestic demand = 900 and Domestic supply = 700

Import = Domestic demand - Domestic supply = 900 - 700 = 200

(c) Gain

When price rises after tariff, producer surplus rises and domestic producers gain.

(d) Gain

Government collects tariff revenue after tariff is imposed (= Unit tariff x Import after tariff), which is a revenue.

(e) Lose

When price rises after tariff, consumer surplus falls and domestic consumers lose.

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