The larger the U.S.imposed per unit import tariff on a good imported and produced in the United States,
A) the smaller the U.S. consumer surplus.
B) the larger the U.S. producer surplus.
C) the larger the government revenue.
D) All of the above.

Question

Quizplus · Accepted Answer

When the U.S. imposes a per unit import tariff, it increases the price of the imported good, reducing the quantity demanded by U.S. consumers. This leads to a reduction in U.S. consumer surplus, as consumers are paying a higher price for the good. At the same time, the higher price of the imported good makes the domestically produced version more competitive, which increases the quantity supplied by U.S. producers and raises their profits, increasing U.S. producer surplus. Finally, the government earns revenue from the tariff, which can be used for public goods, services or to pay off public debt. Therefore, all three effects occur simultaneously, making answer D the correct one.

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