Question: p.334 #7

The United States currently imports all of its coffee. The annual demand for coffee buy the united states consumption is given by the demand curve of Q=250-10P, there Q is quantity in millions of pounds. And P is the market price per pound of coffee. World producers can harvest and ship coffee to the United States distributors at a constant $8 per pound. The U.S. distributor can in turn distribute coffee for a constant $2 per pound. The us coffee market is competitive. Congress is considering a tariff on coffee imports of $2 per pound.

1. if there is no tariff, how much do consumers pay for coffee per pound? What is the quantity demanded?
2. If the tariff is imposed how much will consumers pay for a pound of coffee> what is the quantity demanded?
3. Calculate the loss consumer surplus
4. Calculate the tax revenue collected by the government
5. Does the tariff result in a net gain or net loss to society as a whole?

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