Given the following information for (small) country A concerning a good X:
$\begin{array} { l r }
\text { free trade price in A } & \$ 20 \text { per unit } \
\text { tariff rate } & 20 \text { percent } \
\text { price in A, with tariff } & \$ 24 \text { per unit } \
\text { consumption in A, free trade } & 1,000 \text { units } \
\text { consumption in A, with tariff } & 900 \text { units } \
\text { production in A, free trade } & 600 \text { units } \
\text { production in A, with tariff } & 800 \text { units }
\end{array}$

Question

Given the following information for (small) country A concerning a good X:
$\begin{array} { l r } 
\text { free trade price in A } & \$ 20 \text { per unit } \
\text { tariff rate } & 20 \text { percent } \
\text { price in A, with tariff } & \$ 24 \text { per unit } \
\text { consumption in A, free trade } & 1,000 \text { units } \
\text { consumption in A, with tariff } & 900 \text { units } \
\text { production in A, free trade } & 600 \text { units } \
\text { production in A, with tariff } & 800 \text { units }
\end{array}$

Quizplus · Accepted Answer

The net welfare loss for small country A from the tariff is $600. This is because there is a deadweight loss of $1,800 due to the reduction in trade, and the increase in government revenue from the tariff is only $800. The decrease in consumer surplus ($4,000) and the increase in producer surplus ($3,200) are included in the calculation of the net welfare loss. Therefore, the best choice is D.

Given the Following Information for (Small) Country a Concerning a Good