Which of the Following Statements About a Tariff Is True

question 43

Multiple Choice

Which of the following statements about a tariff is true?

• A) A tariff increases producer surplus, decreases consumer surplus, increases revenue to the government, and increases total surplus.
• B) A tariff increases consumer surplus, decreases producer surplus, increases revenue to the government, and reduces total surplus.
• C) A tariff increases producer surplus, decreases consumer surplus, increases revenue to the government, and reduces total surplus.
• D) A tariff increases consumer surplus, decreases producer surplus, increases revenue to the government, and increases total surplus.

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Definitions:

Initial Cost

The expenditure incurred at the beginning of a project or investment, including capital investment and operational expenses when applicable.

Home Currency Approach

A method used in international finance where companies evaluate their foreign operations and transactions in their domestic currency.

Cash Inflows

The total amount of money being transferred into a business, typically from operations, investments, and financing activities.

Exchange Rate

The price at which one currency can be exchanged for another in the foreign exchange market.