Exhibit 17.4

-Refer to Exhibit 17.4, which shows the market for wheat in the country of Palatino. S^D is the domestic supply of wheat, and D^D is the domestic demand for wheat. Suppose the world price of wheat is $9 per bushel and a specific tariff of $6 is imposed on each bushel of wheat imported. The net welfare loss from the tariff is represented by area(s) _____

Question

Exhibit 17.4

-Refer to Exhibit 17.4, which shows the market for wheat in the country of Palatino. S^D is the domestic supply of wheat, and D^D is the domestic demand for wheat. Suppose the world price of wheat is $9 per bushel and a specific tariff of $6 is imposed on each bushel of wheat imported. The net welfare loss from the tariff is represented by area(s) _____

Quizplus · Accepted Answer

The net welfare loss from the tariff is represented by deadweight loss, which is shown by the areas B and D. The consumer surplus loss is represented by area B, and the producer surplus loss is represented by area D. Therefore, the correct answer is C, which includes the areas B and D.

Exhibit 17.4 -Refer to Exhibit 17.4, Which Shows the Market for Wheat