The figure below shows the demand (D) and supply (S) curves of a good produced domestically in an economy as well as traded in the international market. Figure 20.1
In the figure,
P1: Price of the good in the international market.
P2: Price of the good in the domestic market after the imposition of tariff by the government.
P3: No-trade price of the good in the domestic market.
According to Figure 20.1, the tariff revenue earned by the domestic government is equal to the:
A) area ABEFH.
B) area FEQ4Q2.
C) area ABH.
D) area HFP1P2.
E) area BEFH
Correct Answer:
Verified
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