The increase in producer surplus when a small nation imposes a tariff is measured by the area:
A)to the left of the supply curve between the commodity price with and without the tariff
B)under the supply curve between the quantity produced with and without the tariff
C)under the demand curve between the commodity price with and without the tariff
D)none of the above.

Question

Quizplus · Accepted Answer

The increase in producer surplus with a tariff is measured by the difference between the price received by producers with the tariff and the price they would have received without the tariff. This difference is shown by the area to the left of the supply curve between the commodity price with and without the tariff. Therefore, choice A is the correct answer.

The Increase in Producer Surplus When a Small Nation Imposes