Suppose that a tariff is imposed on imported cheese.This will have the effect of __________ the quantity consumed of cheese,__________ consumers' surplus,and __________ the government's tariff revenues.
A) increasing; increasing; increasing
B) decreasing; decreasing; increasing
C) increasing; decreasing; decreasing
D) decreasing; increasing; increasing
E) decreasing; increasing; decreasing

Question

Quizplus · Accepted Answer

When a tariff is imposed on imported cheese, its price will increase for the domestic consumers. As the price of cheese increases, the quantity demanded will decrease according to the law of demand. Therefore, the quantity consumed will decrease. Due to the increasing price, consumers' surplus will also decrease as some consumers will be priced out of the market. On the other hand, the tariff will increase government revenue, as a percentage of the tariff will be collected by the government.

Suppose That a Tariff Is Imposed on Imported Cheese