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1. You are given the following information about sugar in the United States:
Situation Situation without tariff with tariff world price $0.10 per pound $0.10 per pound tariff (specific) 0 $0.15 per pound U.S. domestic price $0.10 per pound $0.25 per pound U.S. consumption 300 million pounds 200 million pounds U.S. production 100 million pounds 150 million poundsa. Calculate the loss to U.S. buyers of sugar from imposing the tariff.
b. Calculate the gain to U.S. sugar producers from imposing the tariff.
c. Calculate the tariff revenue collected by the government.
d. Calculate the net gain or loss to the U.S. economy as a whole from the tariff.
2. Discuss the arguments for and against each of the following justifications for tariffs:
a. infant industries
b. national defense
c. income redistribution
d. optimal tariff
e. promotion of domestic production
|David A. Latzko
Department of Business and Economics
Wilkes-Barre, PA 18766
phone: (717) 408-4718
fax: (717) 408-4917