Question 20.18

8. The accompanying table shows the U.S. domestic demand schedule and domestic supply schedule for oranges. Suppose that the world price of oranges is $0.30 per orange.

Price of orange Quantity of
oranges demanded
(thousands)		 Quantity of
oranges supplied
(thousands)
$1.00 2 11
0.90 4 10
0.80 6 9
0.70 8 8
0.60 10 7
0.50 12 6
0.40 14 5
0.30 16 4
0.20 18 3

  1. Draw the U.S. domestic supply curve and domestic demand curve.

  2. With free trade, how many oranges will the United States import or export?

    Suppose that the U.S. government imposes a tariff on oranges of $0.20 per orange.

  3. How many oranges will the United States import or export after introduction of the tariff?

  4. In your diagram, shade the gain or loss to the economy as a whole from the introduction of this tariff.