Figure 7-2 Suppose the U.S.government imposes a $0.75 per pound tariff on coffee imports.Figure 7-2 shows the impact of this tariff.
-Refer to Figure 7-2.The increase in domestic producer surplus as a result of the tariff is equal to
A)$11.25 million.
B)$18 million.
C)$32.5 million.
D)$45 million.

Question

Figure 7-2  Suppose the U.S.government imposes a $0.75 per pound tariff on coffee imports.Figure 7-2 shows the impact of this tariff.
-Refer to Figure 7-2.The increase in domestic producer surplus as a result of the tariff is equal to
A)$11.25 million. 
B)$18 million. 
C)$32.5 million. 
D)$45 million.

Quizplus · Accepted Answer

The increase in domestic producer surplus is equal to the area of the triangle above the domestic supply curve and below the world price line. This area is equal to 1/2 * (15 - 10) * (12 - 10) = $11.25 million.