Question

Americans buy 5,000 plywood boards for $20 each with 4,000 coming from Canada. Prez. Trump slaps a $10 tariff on any from Canada and with the tariff now 4,000 are sold for $30 each with half coming from Canada. With the tariff How much more do Canada suppliers get paid for each? How many less do Canada suppliers sell? What does the government get? (below is a conceptual question not based on the above example and worth twice as much) Explain your best reason for restricting trade.

How much more do Canadian suppliers get paid for each?

How many less do Canada suppliers sell?

What does the government get? (below is a conceptual question not based on the above example and worth twice as much)

Explain your best reason for restricting trade.

Answer 1

The table below explains the situation before and after the tariff.

	US production	Canada production	Total demand
Pre-tariff
Quantity	1000	4000	5000
Price	20	20
Revenue for producers	20000	80000	100000
Post-tariff
Quantity	2000	2000	4000
Price excl. tariff	30	20
Revenue for producers	60000	40000	100000
Tariff		10
Revenue for Govt		20000	20000
Payment by consumers	60000	60000	120000