The diagram below shows the domestic demand and supply curves for cotton towels in Canada.The prevailing world price of cotton towels is PW.Assume that all cotton towels are identical.
FIGURE 34- 3
-Refer to Figure 34- 3.If Canada imposes a tariff of $t per cotton towel,the deadweight loss to the Canadian economy is shown by area

Question

The diagram below shows the domestic demand and supply curves for cotton towels in Canada.The prevailing world price of cotton towels is PW.Assume that all cotton towels are identical.
  FIGURE 34- 3
-Refer to Figure 34- 3.If Canada imposes a tariff of $t per cotton towel,the deadweight loss to the Canadian economy is shown by area

Quizplus · Accepted Answer

The deadweight loss caused by a tariff is the lost gains from trade due to the reduction of trade caused by the tariff. In this case, the deadweight loss is represented by the area of triangle B and rectangle D. Therefore, the best choice is C.

The Diagram Below Shows the Domestic Demand and Supply Curves