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Figure: A Tariff on Imports
-(Figure: A Tariff on Imports) Refer to the figure. Suppose the government intervenes with a $2 tariff; the total cost of the tariff to the citizens in that country is:
A) $350 million.
B) $400 million.
C) $550 million.
D) $700 million.

Question

Use the following to answer questions:
Figure: A Tariff on Imports 
-(Figure: A Tariff on Imports) Refer to the figure. Suppose the government intervenes with a $2 tariff; the total cost of the tariff to the citizens in that country is:
A) $350 million. 
B) $400 million. 
C) $550 million. 
D) $700 million.

Quizplus · Accepted Answer

The total cost of the tariff to the citizens in that country is the area of the triangle formed by the demand curve, the supply curve, and the tariff line. This area is equal to 0.5 * (200 million) * (2) = $200 million.

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