Figure 9.5.1
-Refer to Figure 9.5.1 above. If free trade in sugar is replaced by a $50 tariff on sugar, the effect on domestic producer surplus will be to:
A) lower it by $50.
B) lower it by $12,500.
C) leave it unchanged.
D) raise it by $50.
E) raise it by $12,500.

Question

Figure 9.5.1
-Refer to Figure 9.5.1 above. If free trade in sugar is replaced by a $50 tariff on sugar, the effect on domestic producer surplus will be to:
A) lower it by $50. 
B) lower it by $12,500. 
C) leave it unchanged. 
D) raise it by $50. 
E) raise it by $12,500.

Quizplus · Accepted Answer

A tariff on sugar imports would protect domestic producers from foreign competition, allowing them to sell more sugar at higher prices. This increases the domestic producer surplus.

Figure 9.5.1 -Refer to Figure 9.5.1 Above. If Free Trade in Sugar