If a tariff is imposed on imports of shrimp into the United States,U.S.producer surplus from shrimp will ________ and U.S.total surplus from shrimp will ________.
A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; decrease
E) increase; not change

Question

Quizplus · Accepted Answer

When a tariff is imposed on imports of shrimp into the United States, the cost of importing shrimp will increase. As a result, domestic producers will be able to sell their shrimp at a higher price, increasing their producer surplus. However, the higher price may cause a decrease in demand for shrimp, leading to a decrease in total surplus. Therefore, U.S. producer surplus from shrimp will increase, but U.S. total surplus from shrimp will decrease.

If a Tariff Is Imposed on Imports of Shrimp into the United