Scenario: The following figure shows the demand curve, D, and the supply curve, S, of chairs in Barylia. Barylia is open to free trade. The world price of chairs is $3, and the government of Barylia decides to impose a $1 tariff on the import of chairs.

-Refer to the scenario above.What is the consumer surplus when Barylia engages in trade and the government imposes a $1 tariff on chairs?

Question

Scenario: The following figure shows the demand curve, D, and the supply curve, S, of chairs in Barylia. Barylia is open to free trade. The world price of chairs is $3, and the government of Barylia decides to impose a $1 tariff on the import of chairs.
 
-Refer to the scenario above.What is the consumer surplus when Barylia engages in trade and the government imposes a $1 tariff on chairs?

Quizplus · Accepted Answer

Consumer surplus is the difference between what consumers are willing to pay and what they actually pay. When a tariff is imposed, it typically reduces consumer surplus because it increases the price of imported goods, making consumers pay more than they would in a free trade scenario. However, without specific numbers from the scenario, such as the demand curve, supply curve, or the equilibrium price with and without the tariff, it's not possible to provide a detailed explanation. The correct answer is chosen based on the assumption that the scenario provided enough information to calculate a consumer surplus of $180 when a $1 tariff is imposed on chairs.

Scenario: the Following Figure Shows the Demand Curve, D, and the Supply