The diagram below shows the demand curve (D) facing a foreign monopoly Supplier of a good to home country I, the ssociated marginal revenue curve (MR), and the foreign monopolist's marginal cost curve (MC), which equals the Average cost curve (AC). If country I places a tariff of the amount T on the Import of the foreign firm's product, the MC curve shifts vertically upward by the Amount of the tariff to (MC + T), which is also (AC + T). Given this situation,Which one of the following statements is TRUE? A) The price of the product when there is no tariff is P₂. B) The imposition of the tariff must lead to a net decrease in welfare in country I. C) The imposition of the tariff leads to a net increase in welfare in country I if Area C₁C₂FG exceeds area P₁P₂AB. D) The imposition of the tariff leads to a net decrease in welfare in country I if Area P₁P₂AB exceeds area C₁C₂HJ.

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The Answer of The diagram below shows the demand curve (D) facing a foreign monopoly Supplier of a good to home country I, the ssociated marginal revenue curve (MR), and the foreign monopolist's marginal cost curve (MC), which equals the Average cost curve (AC). If country I places a tariff of the amount T on the Import of the foreign firm's product, the MC curve shifts vertically upward by the Amount of the tariff to (MC + T), which is also (AC + T). Given this situation,Which one of the following statements is TRUE? A) The price of the product when there is no tariff is P₂. B) The imposition of the tariff must lead to a net decrease in welfare in country I. C) The imposition of the tariff leads to a net increase in welfare in country I if Area C₁C₂FG exceeds area P₁P₂AB. D) The imposition of the tariff leads to a net decrease in welfare in country I if Area P₁P₂AB exceeds area C₁C₂HJ.

The Diagram Below Shows the Demand Curve (D) Facing a Foreign