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The Figure Below Shows the Demand (D) and Supply (S)

Question 27

Multiple Choice

The figure below shows the demand (D) and supply (S) curves of a good produced domestically in an economy as well as traded in the international market. Figure 21.1 The figure below shows the demand (D)  and supply (S)  curves of a good produced domestically in an economy as well as traded in the international market. Figure 21.1   In the figure, P<sub>1</sub>: Price of the good in the international market. P<sub>2</sub>: Price of the good in the domestic market after the imposition of tariff by the government. P<sub>3</sub>: No-trade price of the good in the domestic market. -Refer to Figure 21.1.If the government imposes a tariff such that the price of the good in the domestic market is P<sub>2</sub> while the international price is P<sub>1,</sub>the dollar value of the tariff is equal to: A) P<sub>3</sub> - P<sub>1</sub>. B) P<sub>2 - </sub>P<sub>3</sub>. C) P<sub>2</sub> - P<sub>1</sub>. D) P<sub>1</sub> - P<sub>2</sub>. E) P<sub>1</sub> - P<sub>3</sub>. In the figure,
P1: Price of the good in the international market.
P2: Price of the good in the domestic market after the imposition of tariff by the government.
P3: No-trade price of the good in the domestic market.
-Refer to Figure 21.1.If the government imposes a tariff such that the price of the good in the domestic market is P2 while the international price is P1,the dollar value of the tariff is equal to:


A) P3 - P1.
B) P2 - P3.
C) P2 - P1.
D) P1 - P2.
E) P1 - P3.

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