A tariff is imposed on imports. Surplus will be redistributed from
A)consumers to producers only.
B)consumers to government only.
C)government to producers only.
D)government to consumers only.
E)consumers to producers and government.

Question

Quizplus · Accepted Answer

When a tariff is imposed on imports, the price of the imported goods increases, leading to a decrease in demand for the foreign product. As a result, some portion of the demand shifts to the domestic market, and the domestic producers experience an increase in their sales. Therefore, the surplus resulting from the tariff will be distributed among the domestic producers and the government (in terms of tax revenue). Additionally, the consumers will be paying a higher price for the imported goods, so they will experience a loss of surplus. Therefore, the surplus will be redistributed from consumers to producers and government.

A Tariff Is Imposed on Imports