Given the Following Information for (Small) Country a Concerning a Good

question 29

Multiple Choice

Given the following information for (small) country A concerning a good X:
$\begin{array} { l r } \text { free trade price in A } & \$ 20 \text { per unit } \\\text { tariff rate } & 20 \text { percent } \\\text { price in A, with tariff } & \$ 24 \text { per unit } \\\text { consumption in A, free trade } & 1,000 \text { units } \\\text { consumption in A, with tariff } & 900 \text { units } \\\text { production in A, free trade } & 600 \text { units } \\\text { production in A, with tariff } & 800 \text { units }\end{array}$

• A) The government revenue generated by the tariff is $800.
• B) The decrease in consumer surplus because of the tariff is $4,000.
• C) The increase in producer surplus because of the tariff is $3,200.
• D) The net welfare loss for A from the tariff is $600.

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Definitions:

Permanent Replacement Workers

Employees hired on a permanent basis to substitute for workers who are on strike, ensuring continued operations.

Purchasing Power

The value of a currency expressed in terms of the amount of goods or services that one unit of money can buy.

Unemployment

The total number of people over 16 who are ready, willing, and able to work, who have been unsuccessfully seeking employment.

Closed Shop Agreement

A labor agreement requiring employees to be members of a specific union as a condition of being hired and to remain in the union for the duration of their employment.