-The above figure shows the market for rice in Japan. S₂ represents the domestic supply curve, and S₁ represents the world supply curve. Currently 10 units are imported. The Consumption distortion loss is equal to

Question

-The above figure shows the market for rice in Japan. S₂ represents the domestic supply curve, and S<sub>1</sub> represents the world supply curve. Currently 10 units are imported. The Consumption distortion loss is equal to A) c + e. B) c. C) c + g + i. D) a + c + d + e.

Quizplus · Accepted Answer

The consumption distortion loss refers to the welfare loss to consumers due to the imposition of a tariff or other trade barrier. It is represented by the area between the domestic price without the tariff (world price) and the domestic price with the tariff, over the quantity consumed domestically. In this case, it includes areas c, g, and i, which are the areas above the world supply curve and below the demand curve, over the quantity consumed domestically after the imposition of the tariff.

-The Above Figure Shows the Market for Rice in Japan