Figure 9-5 Suppose the U.S. government imposes a $0.75 per pound tariff on coffee imports. Figure 9-5 shows the impact of this tariff.
-Refer to Figure 9-5. The increase in domestic producer surplus as a result of the tariff is equal to

Question

Figure 9-5  Suppose the U.S. government imposes a $0.75 per pound tariff on coffee imports. Figure 9-5 shows the impact of this tariff.
-Refer to Figure 9-5. The increase in domestic producer surplus as a result of the tariff is equal to

Quizplus · Accepted Answer

The increase in domestic producer surplus is equal to the area of the triangle formed by the increase in domestic price and the increase in domestic quantity supplied. This area is equal to 1/2 * (1.50 - 1.25) * (12 - 10) = 1/2 * 0.25 * 2 = $0.25 million.