Question
The small happy Kingdom of Pollyanna does not trade with the rest of the world, but uses U.S dollars for its currency. Its domestic price
The small happy Kingdom of Pollyanna does not trade with the rest of the world, but uses U.S dollars for its currency. Its domestic price of tofu is $1 per pound and the Kingdom produces and consumes 5 tons of tofu. The world price of tofu is just $0.50 per pound. At this price, the Kingdom would produce only 2 tons of tofu and would consume 8 tons of tofu, and thus have to import 6 tons of tofu. Suppose the Kingdom decides to open up to trade, but imposes a tariff of 0.25/lb on all imports of tofu. How much money does the Kingdom collect from this tariff?
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Intermediate Accounting
Authors: James D. Stice, Earl K. Stice, Fred Skousen
17th Edition
032459237X, 978-0324592375
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