The following question(s)refer to the figure below,which shows the effect of a country imposing a tariff on an imported product.
Figure 17-14

-Refer to Figure 17-14.Suppose that a tariff of t is imposed upon this good,raising the price to PW + t.As a result,

Question

The following question(s)refer to the figure below,which shows the effect of a country imposing a tariff on an imported product.
Figure 17-14
 
-Refer to Figure 17-14.Suppose that a tariff of t is imposed upon this good,raising the price to PW + t.As a result,

Quizplus · Accepted Answer

According to Figure 17-14, when the tariff is imposed, the new domestic price becomes PW + t, which is higher than the original world price (PW). As a result, imports decrease to the difference between the quantity demanded at the new domestic price (Qd) and the quantity supplied domestically (QS), which is 30 units (A). Domestic producers respond to the higher price by increasing production to the quantity supplied domestically (QS) since they can now sell their goods at a higher price, resulting in an increase in domestic production to 50 units (B). Finally, domestic consumers reduce their consumption due to the higher price, leading to a fall in domestic consumption to the difference between the quantity supplied domestically (QS) and the reduced quantity demanded at the new price (QD'), which is 80 units (C). Therefore, all of the above are true (D).

The Following Question(s)refer to the Figure Below,which Shows the Effect