Use Figure 1 to answer questions

-In Figure 1,if the free trade price was $10 and a $5 tariff was imposed on the imports,then how much is the gain in producer surplus?
A)20
B)40
C)50
D)80

Question

Use Figure 1 to answer questions

-In Figure 1,if the free trade price was $10 and a $5 tariff was imposed on the imports,then how much is the gain in producer surplus?
A)20 
B)40 
C)50 
D)80

Quizplus · Accepted Answer

The gain in producer surplus is equal to the difference between the price received by producers with the tariff and the price they would receive without the tariff. In this case, the price received by producers with the tariff is $15 ($10 + $5), and the price they would receive without the tariff is $10. Therefore, the gain in producer surplus is $5.

Use Figure 1 to Answer Questions