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 deadweight loss of the tariff imposed by the government?

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 deadweight loss of the tariff imposed by the government?

Quizplus · Accepted Answer

The deadweight loss is the loss of consumer and producer surplus that results from the imposition of a tariff. In this case, the tariff is $10 per unit, and the demand curve is linear. The deadweight loss is therefore a triangle with a base of 2 units and a height of $10, which is $10.

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