ECON 260 6. If Mexico imposes a tariff on lumber, then which of the following is

Question

ECON 260 6. If Mexico imposes a tariff on lumber, then which of the following is NOT likely to occur? a. Mexican imports of foreign lumber decrease. b. total surplus in the Mexican lumber market increases. c. producer surplus in the Mexican lumber market increases. d. the domestic price of the good increases above the world price by the amount of tariff imposed. Figure#2: Price per Saddle Domestic Supply Tariff World P1 I. Price Domestic Demand 01 Q2 03 Q4 Quantity Saddles of 7. Refer to Figure #2, with the tariff, what are the areas that represents the loss of consumer surplus? b. E c. D + F d C+D+E+F 8. Refer to Figure #2. With the tariff, what are the areas that represents the tariff revenue to the government? b. E c. D +F d. C+D+E+F a. C 9. Refer to Figure #2. With the tariff, what are the areas that represents the dead weight loss to the country? 10, Refer to Figure #2. With the tariff, what are the area(s) that represent(s) the gain of the producer surplus? b. E c. D+F d. C+D+E+F a. C c. D+F d. C+D+E+F

Explanation / Answer

Q6
Answer
Option
b
The tariff decreases consumer surplus more than the increase in producer surplus and revenue so the tariff creates deadweight loss off amount decrease in welfare.
other options,
The price increases so the demand decreases which decreases the import.
the increase in price increases the producer surplus because producer surplus is the area above supply curve and below price.
the after tarrif=world price+tarrif

Q7
Answer
Option d
The consumer surplus is the area above price and below demand curve and tariff pushing price up by area C+D+E+F

Q8
Answer
Option E
The revenue=tarrif *import
Import=demand-domestic supply
=Q3-Q2
The revenue=(Q3-Q2)*(P2-P1)=area E

Q9
Option c
The tariff decreases consumer surplus more than the increase in producer surplus and revenue so the tariff creates deadweight loss off amount decrease in welfare.
The producer surplus increases by area C and revenue is E so the deadweight loss is D+F

Q10

Answer

Option a

Area C

as stated above.

Related Questions

Navigate

• Browse (All)
• Browse E
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.