The Effect of an Import Tariff on a Specific Imported

question 15

Multiple Choice

The effect of an import tariff on a specific imported good on (domestic) consumer and producer surplus can be summarized as follows:

• A)Consumer surplus is increased and producer surplus is decreased.
• B)Consumer surplus and producer surplus are both increased.
• C)Consumer surplus and producer surplus are both decreased.
• D)Consumer surplus is decreased and producer surplus is increased.
• E)There is no effect on either consumer or producer surplus.

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Definitions:

Economic Outcome

The result of economic activities, often measured in terms of growth, employment, and inflation.

Quantity Supplied

The total amount of a good or service that producers are willing and able to sell at a given price in a specific time period.

Equilibrium Price

The price at which the quantity of goods demanded equals the quantity of goods supplied, commonly referred to as the market-clearing price.

Tax

A mandatory financial charge or some other type of levy imposed upon a taxpayer by a governmental organization in order to fund various public expenditures.