Question

Suppose the nation of Sugarland consists of 50,000 households, 10 of whom are sugar producers. Arguing that the sugar industry is vital to the national economy, sugar producers propose an import tariff. The loss in consumer surplus due to the tariff will be $100,000 per year. The total gain in producer surplus will be $25,000 per year. Round your answer to the nearest dollar. What is the gross cost per household per year of the proposed policy? What is the policy's benefit per sugar producer of the per year? Why would you expect this type of trade protection to be passed into law? The total benefits of the import tariff are larger than the costs. Sugar producers are more likely to be in government positions than the rest of the population. The benefits of the trade policy are concentrated among a few, whereas the costs are dispersed throughout the whole population. Producer surplus is more important than consumer surplus. Import tariffs, such as in the example above, do not create deadweight loss.

Answer 1

1). $2 per year

2). $2500 per year

Step-by-step explanation:

The explanation is given in the below picture. Thank you

Answer 2

Please check the following explanation

Step-by-step explanation:

• gross cost to the house hold is as follows:

the loss of consumer surplus because of import duty= $100,000

the total population is 50,000, and per capita loss is $2 (you said that only 10 members are sugar producers)

• benefit for the sugar producres' is= 25,000/10= $2,500

per capita benefit to sugar producer= $2,500

• Producer surplus is more important than consumer surplus. Import tariffs, such as in the example above, do not create deadweight loss.