Assume the nation of Sugarland consists of the 50,000 households, 10 of whom are sugar producers. Arguing that the sugar industry is vital to national economy, sugar formers propose an import tariff. The loss in consumer surplus due to the tariff will be $100,000 per year. The total gain in producer surplus will be $25,000 per year.
1. Calculate the gross cost per household per year of the proposed policy?
2. Calculate the policy's benefit per sugar producer per year?