Exhibit 19.2

-Refer to Exhibit 19.2,which shows U.S.demand for and supply of a good.Suppose the world price of the good is $1.00 per unit and a specific tariff of $0.50 per unit is imposed on each unit of the imported good.In such a case,net welfare loss as a result of a tariff of $0.50 per unit is represented by the area ____

Question

Exhibit 19.2
 
-Refer to Exhibit 19.2,which shows U.S.demand for and supply of a good.Suppose the world price of the good is $1.00 per unit and a specific tariff of $0.50 per unit is imposed on each unit of the imported good.In such a case,net welfare loss as a result of a tariff of $0.50 per unit is represented by the area ____

Quizplus · Accepted Answer

The net welfare loss due to the tariff is represented by the area of i + f. The area i represents the loss in consumer surplus, and area f represents the gain in producer surplus. Therefore, the net welfare loss can be calculated by subtracting area f from area i. The other areas (c, e, and b + d) do not represent the net welfare loss due to the tariff.

Exhibit 19.2 -Refer to Exhibit 19.2,which Shows U.S.demand for and Supply of for and Supply