Given the Following Information Pertaining to Large Country a with Respect

question 21

Multiple Choice

Given the following information pertaining to large country A with respect to good X Under free trade and with a tariff in place:
$\begin{array} { l r } \text { domestic price of X under free trade } & \$ 100 \\\text { world price of X under free trade } & \$ 100 \\\text { domestic price of X with tariff in place } & \$ 103 \\\text { world price of X with tariff in place } & \$ 98 \\\text { domestic production of X under free trade } & 40 \text { units } \\\text { domestic production of X with tariff in place } & 50 \text { units } \\\text { consumption of X under free trade } & 100 \text { units } \\\text { consumption of X with tariff in place } & 80 \text { units }\end{array}$
What is the impact of the tariff upon country A's welfare?

• A) loss of $15.
• B) loss of $45.
• C) gain of $15.
• D) gain of $60

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Definitions:

Quantity Supplied

The amount of a good or service that producers are willing and able to sell at a given price.

Equilibrium Price

The price at which the quantity of a good or service demanded by consumers equals the quantity supplied by producers, leading to market balance.

Leather

A durable and flexible material created by tanning animal hides, used in making clothing, furniture, and various goods.

Leather Shoes

Footwear made from the treated and processed hides of animals, prized for durability, comfort, and style.