Domestic Action Figure Market Price Supply 10 World Price Plus Tariff HL World P

Question

Domestic Action Figure Market Price Supply 10 World Price Plus Tariff HL World Price Demand 20 60 Figurines 1000s month 8. (5pts)Consider the above graph. The govemment decides impose a tariff on the action figurine market. After the tariff, a. Producer Surplus is represented by area D b. Consumer Surplus is represented by area A+B+C+D c. Dead Weight Loss is represented by area E+F d. Tariff Revenue is represented by area H+1 9. (5pts)Consider the above graph. After the tariff, a. Both Producers and consumers are better off b. Consumer are better off and producers are worse off. C. Both Producers and consumers are worse off. d. Consumer are worse off and producers are better off

Explanation / Answer

CS = area between below demand curve and above price line

= A + B + E + F

PS = Area between below price and above supply curve

= C + D

DWL = G + J

Revenue = H + I

so d is correct option

Since tariff increase domestic price due to this domestic producer can charge above the world price thereby producers encourage to increase production. On the other hand , due to increase in domestic price domestic buyer have to pay more and therefore encourages them to reduce the consumption.

So tariff leads to domestic produers are better off and consumers are wrose off

so d is correct option

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