Question

Suppose France imposes a tariff on wine of 3 euros per bottle. If government revenue from the tariff amounts to 30 million euros per year and if the quantity of wine supplied by French .wine producers, with the tariff, is 8 million bottles per year, then we can conclude that_____.

a. the quantity of wine demanded by France, with the tariff, is 18 million bottles per year.
b. the quantity of wine demanded by France, without the tariff, would be 24 million bottles per year.
c. the amount of the deadweight loss is 24 million euros per year.
d. the tariff causes French buyers of wine to pay 2 euros more per bottle than they would pay without the tariff.

Answer 1

The correct answer is option A.

Step-by-step explanation:

The tariff per bottle is 3 euros.

The government revenue from the tariff is 30 million euros.

The quantity of wine imported

=
`(Revenue\ from\ tariff)/(Tariff\ per\ unit)`

=
`(30\ million)/(3)`

= 10 million

The quantity of wine produced by domestic producers is 8 million bottles.

The total quantity demanded of wine

= Imports + Domestic production

= 10 million + 8 million

= 18 million bottles