Check Your Understanding

1. Question

   Use the information provided in Figure 44.2 to answer the following questions:

   What is the smallest tariff that would cause all plates to be supplied by U.S. firms?

   $6. A tariff of $5.99 or less would make the price of imported plates (including the tariff) $9.00 × $5.99 = $14.99 or less, and at these prices, the demand exceeds the domestic supply.

2. Question

   What is the smallest import quota that would have no effect on international trade? Hint: You can think of the question this way: Every import quota smaller than what level would have an effect on international trade?

   4 million plates. A quota of 4 million plates or more would not affect international trade because consumers only want to import 4 million plates, which this quota would allow. However, a quota of fewer than 4 million plates would affect international trade because consumers could not obtain all of the plates that they want for $9, and the restriction on total supply would cause the price to rise above $9.