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Figure: Foreign Trade with a Tariff
-(Figure: Foreign Trade with a Tariff) Refer to the figure. A $1 tariff generates increased domestic production by:
A) $40 million units.
B) $90 million units.
C) $140 million units.
D) $180 million units.

Question

Use the following to answer questions:
Figure: Foreign Trade with a Tariff 
-(Figure: Foreign Trade with a Tariff) Refer to the figure. A $1 tariff generates increased domestic production by:
A) $40 million units. 
B) $90 million units. 
C) $140 million units. 
D) $180 million units.

Quizplus · Accepted Answer

The $1 tariff increases domestic production from the initial level to a higher level, which is a difference of $40 million units.

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