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 gain in producer 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 gain in producer surplus?

Quizplus · Accepted Answer

The gain in producer surplus due to the tariff is represented by area c, as it reflects the increase in domestic producer prices from the world price to the world price plus the tariff.

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