Refer to the figure below to answer the following questions. Figure 7.3.1
The figure shows the market for shirts in Canada,where D is the domestic demand curve and S is the domestic supply curve.The world price is $20 per shirt.Canada imposes a tariff on imported shirts of $4 per shirt.
-Refer to Figure 7.3.1.The deadweight loss from the tariff is
A)$80 million.
B)$16 million.
C)zero.
D)$64 million.
E)$32 million.

Question

Refer to the figure below to answer the following questions.  Figure 7.3.1
The figure shows the market for shirts in Canada,where D is the domestic demand curve and S is the domestic supply curve.The world price is $20 per shirt.Canada imposes a tariff on imported shirts of $4 per shirt.
-Refer to Figure 7.3.1.The deadweight loss from the tariff is
A)$80 million. 
B)$16 million. 
C)zero. 
D)$64 million. 
E)$32 million.

Quizplus · Accepted Answer

The deadweight loss from a tariff is typically calculated as the loss in consumer and producer surplus that is not offset by gains in government revenue. In this case, the correct answer is $32 million, which represents the inefficiency introduced by the tariff.

Refer to the Figure Below to Answer the Following Questions