Figure 9-17
-Refer to Figure 9-17. The deadweight loss caused by the tariff is

Question

Figure 9-17 
-Refer to Figure 9-17. The deadweight loss caused by the tariff is

Quizplus · Accepted Answer

The deadweight loss caused by the tariff is the triangle formed by the distance between the domestic supply curve (S) and the world price (Pw) and the distance between the domestic demand curve (D) and the world price (Pw). In this case, the length of each of the sides of the triangle is 4, and the height is 24. Therefore, the area of the triangle is (4 x 24) / 2 = 48, and since deadweight loss is half of this, deadweight loss is equal to $48. However, since the tariff revenue is $48, the total welfare loss caused by the tariff is $48 + $48 = $96.

Figure 9-17 -Refer to Figure 9-17. the Deadweight Loss Caused by the Caused