The figure above shows the market for shirts in Australia, where D is the Australian demand curve and S is the Australian supply curve. The world price is $20 per shirt. Australia imposes a tariff on imported shirts of $4 per shirt.
-In the figure above, the deadweight loss from the tariff is _______.

Question

Quizplus · Accepted Answer

Deadweight loss from a tariff is calculated by identifying the reduction in consumer and producer surplus due to the tariff, which often results in a loss of efficiency in the market. The area representing this loss is typically a triangle formed between the new and old equilibrium points and the supply or demand curve. Without seeing the specific figure, the general approach to calculating deadweight loss involves understanding these economic principles. Given the options, if the correct answer is stated as $32 million, it suggests that this amount best represents the calculated area of inefficiency created by the tariff in the given scenario.

The Figure Above Shows the Market for Shirts in Australia