If a small country imposes a tariff on imported motorcycles:
A)the surplus of the domestic producers of motorcycles will decline, but the surplus of the domestic consumers will increase.
B)the surplus of both the domestic producers and consumers of motorcycles will decline.
C)the surplus of both the domestic producers and consumers of motorcycles will increase.
D)the surplus of the domestic producers of motorcycles will increase, but the surplus of the domestic consumers will decline.

Question

Quizplus · Accepted Answer

Imposing a tariff on imported motorcycles will make the imported motorcycles more expensive, thereby making the domestic motorcycles relatively cheaper. This will lead to an increase in the demand for domestic motorcycles and a decrease in the demand for imported motorcycles.

As a result, the domestic producers of motorcycles will increase their production to meet the higher demand, which will lead to an increase in their surplus. On the other hand, the domestic consumers of motorcycles will face higher prices, which will lead to a decrease in their surplus.

Therefore, the surplus of the domestic producers of motorcycles will increase, but the surplus of the domestic consumers will decline. Choice D is the best answer.

If a Small Country Imposes a Tariff on Imported Motorcycles