Exhibit 17.2

-Refer to Exhibit 17.2, which shows U.S. demand for and domestic supply of a good. Suppose the world price of the good is $1.00 per unit, and a specific tariff of $0.50 per unit is imposed on each unit of the imported good. In such a case, the loss of consumer surplus as a result of a tariff of $0.50 per unit is represented by area _____

Question

Exhibit 17.2
 
-Refer to Exhibit 17.2, which shows U.S. demand for and domestic supply of a good. Suppose the world price of the good is $1.00 per unit, and a specific tariff of $0.50 per unit is imposed on each unit of the imported good. In such a case, the loss of consumer surplus as a result of a tariff of $0.50 per unit is represented by area _____

Quizplus · Accepted Answer

The loss of consumer surplus due to the tariff is represented by the areas c + i + e + f, which represents the increase in price paid by consumers and the resulting decrease in the quantity demanded. Therefore, the best choice is (C).

Exhibit 17.2 -Refer to Exhibit 17.2, Which Shows U.S. Demand for and U.S