The Imposition of a Tariff on an Imported Good Causes

question 43

Multiple Choice

The imposition of a tariff on an imported good causes consumer surplus to ________ and producer surplus to ________.

• A)increase; increase
• B)decrease; decrease
• C)decrease; increase
• D)increase; decrease
• E)remain the same; decrease

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Definitions:

Fixed Cost Per Unit

The total fixed costs divided by the number of units produced, indicating how much each unit needs to contribute to fixed costs.

Level of Activity

A measure of the volume of production, operation, or work undertaken by a business or facility within a particular time period.

Unit Variable Cost

A cost that varies directly with the production volume, including materials and labor directly involved in production.

Units of Activity

A depreciation method that allocates an asset's cost based on its usage, activities, or units produced, rather than the passage of time.