Micro 2012 FRQ #3- Trade and Tariffs

The video tutorial covers a microeconomics exam question from 2012, focusing on domestic supply and demand for sugar, and the effects of open trade and tariffs. It explains how to calculate imports at a world price of $2, the impact of a tariff increasing the price to $4 on consumer surplus, and how to calculate tariff revenue. The tutorial concludes with a discussion on maximizing total surplus by avoiding tariffs, highlighting the differences in consumer and producer surplus with and without tariffs.

At a world price of $2, how many units of sugar will the country import?

• 12 units

• 2 units

• 14 units

• 16 units

What happens to domestic output when a tariff raises the world price to $4?

• It increases to 10 units

• It decreases to 2 units

• It remains at 2 units

• It increases to 6 units

How is consumer surplus calculated when the world price is affected by a tariff?

• Base times height

• One half base times height

• Base plus height

• Base minus height

What is the tariff revenue if the tariff per unit is $2 and 4 units are imported?

• $10

• $8

• $6

• $4

Why might a government choose not to impose a tariff to maximize total surplus?

• To decrease total surplus

• To maximize both consumer and producer surplus

• To increase consumer surplus only

• To increase producer surplus only