The Effect of a Tariff on a Specific Imported Good

question 76

Multiple Choice

The effect of a 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:

Residual Equity

The amount of equity remaining for shareholders after all liabilities have been deducted from total assets.

Owner's Equity

The assets left over in a business once liabilities are cleared, showing the equity of owners or shareholders.

Spoils

Goods that are damaged or unusable during the production process and cannot be sold to customers.

Monetary Unit Assumption

A financial accounting concept that believes transactions and events can be quantified in terms of money.