Before the imposition of the tariff, the domestic quantity demanded is _, and the domestic quantity supplied is _. After the tariff, the domestic quantity demanded is _, and the do... Before the imposition of the tariff, the domestic quantity demanded is _, and the domestic quantity supplied is _. After the tariff, the domestic quantity demanded is _, and the domestic quantity supplied is _. Complete the following table by indicating which areas represent consumer surplus before the tariff, consumer surplus after the tariff, and the loss to consumers associated with the tariff. Check all that apply. Complete the following table by indicating which areas make up producer surplus before the tariff, producer surplus after the tariff, and the gain to producers associated with the tariff. Check all that apply. Complete the following table by indicating which areas make up total surplus before the tariff, total surplus after the tariff (including government revenue from the tariff), and the deadweight loss to be associated with the tariff. Check all that apply.
Understand the Problem
The question is asking for calculations related to consumer and producer surplus before and after the imposition of a tariff on a good, along with the associated losses due to the tariff. It requires an analysis of the economic impact of the tariff based on a provided graph.
Answer
See answer for specific areas.
Consumer surplus before the tariff is the area 'A + B + C', and after the tariff is 'A'. The loss to consumers is 'B + C + D'. Producer surplus before the tariff is 'D', and after the tariff is 'B + D'. The gain to producers is 'B'. Total surplus before the tariff is 'A + B + C + D + E + F', and after the tariff is 'A + B + D + E'. The deadweight loss is 'C + F'.
Answer for screen readers
Consumer surplus before the tariff is the area 'A + B + C', and after the tariff is 'A'. The loss to consumers is 'B + C + D'. Producer surplus before the tariff is 'D', and after the tariff is 'B + D'. The gain to producers is 'B'. Total surplus before the tariff is 'A + B + C + D + E + F', and after the tariff is 'A + B + D + E'. The deadweight loss is 'C + F'.
More Information
Tariffs typically reduce consumer surplus while increasing producer surplus, leading to deadweight loss in the economy.
Tips
A common mistake is mixing up surplus areas on the graph; carefully identify each region.
Sources
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