Use the Following to Answer Question

question 221

Multiple Choice

Use the following to answer question:
-(Figure: The Market for Calculators) Use Figure: The Market for Calculators.Assume that S and D represent the domestic demand and supply of calculators.The world price,P_W,equals $100.The government imposes an import tariff of $20 per calculator.Compared with the free trade situation,the tariff leads to a deadweight loss equal to area:

• A)K + L.
• B)G + J.
• C)G + H + I + J.
• D)There is no deadweight loss,since the tariff revenue the government receives offsets any losses.

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Definitions:

Opportunity Cost

The expense incurred from not choosing the second-best option available during decision-making.

Marginal Cost

The swell in aggregate expenditure due to the production of an additional unit of a product or service.

Environment Pollution

The contamination of the natural environment by harmful substances or activities, leading to adverse effects on ecosystems and human health.

Ethanol Subsidies

Financial incentives provided by governments to support the production, use, and development of ethanol as a form of renewable energy.