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Unformatted text preview: willing to sell. e. The revenue the government collects is shown by area D. It is equal to 500,000 X $7,500, or $3.75 billion. f. Sales revenue after the tariff is 500,000 X $22,500, or $11.25 billion. Before the tariff sales revenue was $15 billion. Revenue has fallen $3.75 billion. g. A quota of 500,000 cars would have the same effect. h. Government would collect no revenue with a quota. Sales revenue would remain unchanged at $15 billion. 3. a. Q=300,000; P=400. b. Qs=200,000 + 250*300=275,000; Qd=400,000 - 250 *300=325,000 shortage=Qd-Qs=50,000 c. Qs = 200,000 + 250(P-200)=150,000+250P Qd= 400,000 - 250 P The new equilibrium quantity and price are Q=275,000 and P=500...
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- Fall '08