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, Australian producers' _______ from the tariff is _______ .

Question

Quizplus · Accepted Answer

Australian producers gain from the tariff because it protects them from foreign competition, allowing them to sell more at a higher price. The area representing their gain is the rectangle under the new price level but above the supply curve, which is $80 million.

The Figure Above Shows the Market for Shirts in Australia