Choose the statement that is incorrect.If Canada imposes a tariff of $1 per imported shirt,the tariff
A)raises the price of a shirt paid by Canadian consumers.
B)benefits Canadian shirt producers.
C)decreases imports of shirts into Canada.
D)creates a deadweight loss.
E)increases total surplus.

Question

Quizplus · Accepted Answer

A tariff on imported shirts will cause a decrease in imports, which will benefit Canadian shirt producers (B) as they face less competition. It will also raise the price of shirts paid by Canadian consumers (A) since the cost of importing shirts has increased. Tariffs create a deadweight loss (D) because they distort trade and result in a loss of total surplus, which harms both producers and consumers. However, the statement that the tariff increases total surplus (E) is incorrect because a tariff results in a loss of total surplus, rather than an increase.

Choose the Statement That Is Incorrect