When a country moves from a free trade position and imposes a tariff on imports,what does this cause
A)a decrease in total surplus in the market
B)a decrease in producer surplus in the market
C)an increase in consumer surplus in the market
D)a decrease in revenue to the government

Question

Quizplus · Accepted Answer

When a tariff is imposed on imports, it raises the price of imported goods, making them more expensive for consumers to buy. This reduces the quantity of imports demanded and reduces the quantity supplied by foreign producers. This ultimately leads to a decrease in the total surplus in the market as consumers pay more and consume less, and producers receive less revenue due to the decreased demand. Additionally, it also typically leads to a decrease in consumer surplus and an increase in producer surplus, but these effects may be smaller than the decrease in total surplus overall. The government may receive revenue from the tariffs, but this may not offset the negative effects on the market.

When a Country Moves from a Free Trade Position and Imposes