Urrgent help needed! Tariffs (1 Viewer)

[SGSII]

Hi Guys,
So my half yearlies for economics is on tmrw and I need someone to help me on this past hsc question of 2011:

And quick question on tariffs, how do I calculate the following using a tariff graph:
Government revenue
Consumer effect
Producer effect
Redistribution effect
Any help is good help!
THANKS

 

[Kipling]

Pretty sure it's D) $2000

Prior to the tariff, foreign producers were selling a quantity of 300 at $10 a shirt = $3000
After the introduction of the tariff foreign producers were selling a quantity of 100 still making 10$ a shirt (as 5$ goes to Government) = 1000$
$3000-$1000 = $2000

 

[SGSII]

Thanks! The answers correct but how did you know which line to look at?
Im still kinda lost on that :S
Please explain.

 

[hasdhil]

The world price that it states is the price without any tariffs being imposed. That is the price that you would you use to calculate the foreign producer's revenue before the tariff. You would look at the difference between the demand and supply curve, ths difference in this quetion is 300, this means that 300 is being imported to meet domestic demand. The price they earn is $10, so you calculate by: 300 x $10 = $3000. It says in the information provided in the question that a tariff of $5 was imposed and so 10 + 5 is 15, meaning that the price now paid by consumers is $15. So you now look at the $15 price line and do the same thing as before, you find the difference between demand and supply. In the question it is 300 - 200 = 100, so 100 is imported goods. However, you still need to only multiply by $10 because the extra $5 charged goes to the government and not to the producers so it is not part of the producer's revenue. Now you have to do the following: 100 x $10 = $1000. After this you have to subtract the revenue after revenue from the revenue before tariff: $3000 - $1000 = $2000.

I know that is was a little bit of a long explanation but i hoped it helped. If you have any more questions about this feel free to ask for help

 

[SGSII]

Thanks so much!!
It makes sense now!