The following figure shows the domestic demand and supply curves for a good.With free trade,the price of the good in the domestic market is P 3 .The government introduces a 5% tariff in the market which raises the domestic price to P 2 .
Figure 7-1

-Refer to Figure 7-1.The increase in the government's revenue due to the imposition of a tariff is equal to _____.

Question

The following figure shows the domestic demand and supply curves for a good.With free trade,the price of the good in the domestic market is P 3 .The government introduces a 5% tariff in the market which raises the domestic price to P 2 .
Figure 7-1
 
-Refer to Figure 7-1.The increase in the government's revenue due to the imposition of a tariff is equal to _____.

Quizplus · Accepted Answer

The increase in the government's revenue due to the imposition of a tariff is equal to the area of the rectangle GHML.

The Following Figure Shows the Domestic Demand and Supply Curves