Suppose that Australia imposes a tariff on imported computer chips.If the increase in producer surplus is $100 million, the increase in tariff revenue is $200 million and the reduction in consumer surplus is $500 million, then the deadweight loss of the tariff is $200 million.

Question

Quizplus · Accepted Answer

The deadweight loss is calculated as the reduction in consumer surplus minus the sum of the increase in producer surplus and tariff revenue: $500 million - ($100 million + $200 million) = $200 million.

Suppose That Australia Imposes a Tariff on Imported Computer Chips