Scenario: The domestic supply and demand of a good in the United States is shown in the figure below. Suppose the world price of this good is $4. Suppose the United States is considering levying a $2 tariff per unit on imports of this good.

-Refer to the scenario above.The U.S.economy will ________ because of this tariff policy.

Question

Scenario: The domestic supply and demand of a good in the United States is shown in the figure below. Suppose the world price of this good is $4. Suppose the United States is considering levying a $2 tariff per unit on imports of this good.
 
-Refer to the scenario above.The U.S.economy will ________ because of this tariff policy.

Quizplus · Accepted Answer

The U.S. economy will lose $20 because tariffs generally lead to higher prices for consumers and can result in inefficiencies and losses in economic welfare.

Scenario: the Domestic Supply and Demand of a Good in the United