Suppose that Australia imposes a tariff on imported computer chips. If the increase in producer surplus is $100 million, the increase in tariff revenue is $200 million and the reduction in consumer surplus is $500 million, then the deadweight loss of the tariff is $800 million.

Question

Quizplus · Accepted Answer

The deadweight loss of the tariff cannot be calculated based on the given information. Deadweight loss is the inefficiency that arises when a market is not at equilibrium due to the imposition of a tax or tariff. It depends on various factors such as the elasticity of demand and supply, the size of the tariff, and the size of the market. None of these factors are specified in the given information. Therefore, it is not possible to determine the deadweight loss of the tariff based on the information provided.

Suppose That Australia Imposes a Tariff on Imported Computer Chips