Answer the question(s)below based upon the following diagram.Note that Q is measured in 1,000s.

-Refer to the figure above.Domestic producers gain ________ because of the tariff.
A)$5
B)$62,500
C)$15
D)$125,000

Question

Answer the question(s)below based upon the following diagram.Note that Q is measured in 1,000s.
 
-Refer to the figure above.Domestic producers gain ________ because of the tariff.
A)$5 
B)$62,500 
C)$15 
D)$125,000

Quizplus · Accepted Answer

Domestic producers gain from the tariff because it increases the price of imported goods, making domestic goods more competitive. The area representing the gain for domestic producers is the area above the world price and below the demand curve, up to the quantity produced domestically after the tariff. This area is represented by the rectangle with dimensions 500 units (the increase in quantity produced domestically) by $125 (the increase in price per unit due to the tariff), which equals $62,500.

Answer the Question(s)below Based Upon the Following Diagram