Scenario: Suppose the world price is $2 per bushel, and U.S. wheat growers are dissatisfied with the level of wheat imports into the United States. They lobby Congress for a $1 per bushel tariff on imported wheat. The following figure shows the U.S. wheat market.

-Refer to the scenario above.The deadweight loss arising from the tariff is represented by which area?

Question

Scenario: Suppose the world price is $2 per bushel, and U.S. wheat growers are dissatisfied with the level of wheat imports into the United States. They lobby Congress for a $1 per bushel tariff on imported wheat. The following figure shows the U.S. wheat market.
 
-Refer to the scenario above.The deadweight loss arising from the tariff is represented by which area?

Quizplus · Accepted Answer

Deadweight loss from a tariff includes the loss of consumer surplus due to higher prices (area C) and the loss of efficiency in the market as some consumers stop buying the product and some inefficient domestic production is encouraged (area E).

Scenario: Suppose the World Price Is $2 Per Bushel, and U.S