Exhibit 19-4

-Refer to the graph in the exhibit.Suppose the country is initially trading without restrictions at a world price of $1.00.If the tariff is $0.50 per unit, what area represents the resulting loss of consumer surplus?

Question

Exhibit 19-4
 
-Refer to the graph in the exhibit.Suppose the country is initially trading without restrictions at a world price of $1.00.If the tariff is $0.50 per unit, what area represents the resulting loss of consumer surplus?

Quizplus · Accepted Answer

The loss of consumer surplus due to the imposition of a $0.50 tariff includes the areas c (consumers now pay more for the goods they still buy), i (the deadweight loss due to decreased consumption), e (the deadweight loss due to decreased production), and f (the increased cost above the world price for the goods still imported).

Exhibit 19-4 -Refer to the Graph in the Exhibit.Suppose the Country Is