Figure 18.5
-For the good in Figure 18.5,with the tariff,the people in the country will produce:

Question

Quizplus · Accepted Answer

With the imposition of a tariff, the price of the good in the country will increase from P1 to P2. This will encourage domestic producers to increase their production, as they can now sell their goods at a higher price. As a result, the domestic supply will increase from Q1 to Q2. The tariff will also reduce the quantity of imports from Q3 to Q4. The new equilibrium will be at point B, where the domestic supply of Q2 meets the reduced demand of Q4. This will lead to an increase in producer surplus, but a decrease in consumer surplus and a deadweight loss due to the distortion of trade.

Figure 18.5 -For the Good in Figure 18.5,with the Tariff,the People in People