If a tariff is imposed on imports of prawns into Australia, Australian consumer surplus from prawns will ________ and Australian total surplus from prawns will ________.
A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; decrease
E) increase; not change

Question

Quizplus · Accepted Answer

Imposing a tariff on imports typically decreases consumer surplus because it raises the price of imported goods, making them more expensive for consumers. Total surplus also decreases because the tariff introduces a distortion in the market, leading to inefficiencies in production and consumption.

If a Tariff Is Imposed on Imports of Prawns into Australia