U. S. firms can produce and sell electric fans for $25. The United States can also import electric fans from China at $19 each and from Canada at $20 each. Electric fans made in the United States, China, and Canada are identical. Currently, the United States imposes a 30% tariff on imported electric fans. which country will the United States import fans?

A) China B) Canada C) both China and Canada D) neither China nor Canada

Question

Business

Harley Mahoney

13 February, 04:10

U. S. firms can produce and sell electric fans for $25. The United States can also import electric fans from China at $19 each and from Canada at $20 each. Electric fans made in the United States, China, and Canada are identical. Currently, the United States imposes a 30% tariff on imported electric fans. which country will the United States import fans?

A) China B) Canada C) both China and Canada D) neither China nor Canada

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Answers (1)

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June · Answer 1

Answer: Option (A) is correct.

Explanation:

U. S firms sell electric fans = $25 each

Before imposition of 30% tariff,

Imported price of electric fans from China = $19 each

Imported price of electric fans from Canada = $20 each

All the three countries are producing identical electric fans.

After imposition of 30% tariff,

Imported price of electric fans from China = $24.7 each (tariff of $5.7)

Imported price of electric fans from Canada = $26 each (tariff of $6)

∴ U. S will import fans from China because China has the lower price of electric fans as compared to United States and Canada after imposition of 30% tariff.