Suppose the United States places a tariff on imported Brazilian ipe (a type of wood). As a result of the tariff, the domestic price of lumber will _____, consumer surplus will _____, and producer surplus will _____.

Question

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The tariff on imported Brazilian ipe will cause the domestic price of lumber to rise because the imported wood becomes more expensive. Consumer surplus will fall because consumers have to pay more or switch to less preferred alternatives. Producer surplus will rise as domestic producers face less competition and can sell their lumber at higher prices.

Suppose the United States Places a Tariff on Imported Brazilian