Exhibit 19-5

-Refer to the graph in the exhibit.Suppose the world price of a baseball is $3, and Canada imposes a tariff of $1 per baseball.Which area represents Canada's net loss as a result of the tariff?

Question

Exhibit 19-5
 
-Refer to the graph in the exhibit.Suppose the world price of a baseball is $3, and Canada imposes a tariff of $1 per baseball.Which area represents Canada's net loss as a result of the tariff?

Quizplus · Accepted Answer

Area b represents the government's revenue from the tariff, while areas c and f represent the deadweight losses due to the tariff, indicating inefficiencies in the market. Thus, Canada's net loss is the sum of these inefficiencies, not including the tariff revenue.

Exhibit 19-5 -Refer to the Graph in the Exhibit.Suppose the World Price