Refer to the above diagram, where S_d and D_d are the domestic supply and demand for a product and P_c is the world price of that product.With a per unit tariff in the amount P_cP_t, price and total quantity sold will be:

Question

Quizplus · Accepted Answer

With a per unit tariff, the domestic price will increase by the amount of the tariff. Thus, the new domestic price will be P_t. This will lead to a reduction in domestic quantity demanded to y and an increase in domestic quantity supplied to x. The total quantity sold will be equal to x, which is the same as before the tariff. Therefore, the answer is choice C, P_t and y.

Refer to the Above Diagram, Where Sd and Dd Are

Refer to the Above Diagram, Where S_d and D_d Are