Question

Suppose that the world price of resins is $100 per ton. Now suppose that the United States imposes a 10% tariff on imported resins. What is the U.S. domestic price of resins after the 10% tariff is imposed (rounded to the nearest dollar) if exporters bear half of the tariff?

Answer 1

Answer:

$ 105 per ton

Explanation:

If the ton is worth $ 100 with a tariff of 10%, duties will be $ 10 per ton. However, if 50% of this amount is paid by exporter, duties equal $ 5 per ton. Therefore, domestic price =

$ 100 + $ 5 = $ 105