The imposition of a tariff on an imported good causes consumer surplus to ________ and producer surplus to ________.

Question

Quizplus · Accepted Answer

The imposition of a tariff on an imported good increases the price of the imported good to domestic consumers, thus reducing the quantity demanded and consumer surplus. At the same time, it raises the price received by domestic producers, increasing producer surplus. Therefore, the consumer surplus decreases and producer surplus increases.

The Imposition of a Tariff on an Imported Good Causes