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A domestic market in Country B. for pipes has a no-trade equilibrium price of $40 and a no-trade equilibrium quantity of 40. Upon engaging in
A domestic market in Country B. for pipes has a no-trade equilibrium price of $40 and a no-trade equilibrium quantity of 40. Upon engaging in free trade, at a Pw (world price) of $20, the domestic demand for Country B. increases to 80, while domestic supply falls to 20. Officials in Country B. decide to implement a tariff, which raises the Pw+tariff to $28. Additionally, the tariff causes domestic demand to fall to 64 and domestic supply to increase to 28. How much tariff revenue can Country B.expect to raise?
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