Suppose two different companies, Beebock and Bike, sell
athletic shoes in the United States. Beebock is located in Brazil. Bike
is located in Or tonville, Minnesota. A tariff must be
paid on all shoes made outside the United States and
sold in the United States. The tariff is 10 percent
of all total sales revenues. Both companies sell 100,000
pairs of shoes per month at a price of $100 per pair
1. Which company must pay the tariff?
2. How much will the tariff cost the company?
3. Who receives the revenues generated by the tariffs?
4. Does Bike benefit from this tariff?