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 the world price of $2, how much will this country import?

What is the consumer surplus when the world price is increased to $4 due to a tariff?

How is producer surplus defined in the context of this scenario?

What is the tariff revenue generated when the world price is $4?

What would be the optimal tariff to maximize total surplus?