The figure below illustrates a tariff. On the graph, Q represents quantity and P represents price. 12 11 10 9 8 1654321 A O B World price + tariff - World price Domestic demand 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Q с Domestic supply Di EF Refer to the above figure. The tariff O decreases producer surplus by the area C and decreases consumer surplus by the area C+D+E+F O decreases producer surplus by the area C + D and decreases consumer surplus by the area D+E+F O increases producer surplus by the area C and decreases consumer surplus by the area C+D+E+F O increases producer surplus by the area B + C and decrease consumer surplus by the area D+E+F

Exploring Economics
8th Edition
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:Robert L. Sexton
Chapter7: Market Efficiency And Welfare
Section: Chapter Questions
Problem 11P
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The figure below illustrates a tariff. On the graph, Q represents quantity and P represents price.
12
16987654321
10
G
с
A
Di
B
E F
Domestic supply
World price + tariff
- World price
Domestic demand
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Q
Refer to the above figure. The tariff
decreases producer surplus by the area C and decreases consumer surplus by the area C + D + E + F.
O decreases producer surplus by the area C+D and decreases consumer surplus by the area D + E + F
O increases producer surplus by the area C and decreases consumer surplus by the area C+D+E+F
O increases producer surplus by the area B + C and decrease consumer surplus by the area D + E + F
Transcribed Image Text:The figure below illustrates a tariff. On the graph, Q represents quantity and P represents price. 12 16987654321 10 G с A Di B E F Domestic supply World price + tariff - World price Domestic demand 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Q Refer to the above figure. The tariff decreases producer surplus by the area C and decreases consumer surplus by the area C + D + E + F. O decreases producer surplus by the area C+D and decreases consumer surplus by the area D + E + F O increases producer surplus by the area C and decreases consumer surplus by the area C+D+E+F O increases producer surplus by the area B + C and decrease consumer surplus by the area D + E + F
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