The Imposition of Tariffs on Imports Results in Deadweight Welfare

question 122

Multiple Choice

The imposition of tariffs on imports results in deadweight welfare losses for the home economy.These losses consist of the

• A) protective effect and the consumption effect.
• B) redistribution effect and the revenue effect.
• C) revenue effect and the protective effect.
• D) consumption effect and the redistribution effect.

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Definitions:

Private Marginal Cost

The cost incurred by a firm or individual for producing one additional unit of a good or service, not including external costs.

Traffic Congestion

Refers to the situation where there are more vehicles than the road can accommodate, leading to slower speeds, longer trip times, and increased vehicular queuing.

Marginal Social Cost

The total cost incurred by society when the production of a good or service is increased by one additional unit, including both private and external costs.

Common Resources

Goods that are non-excludable and rivalrous, meaning they are available to all but can be depleted by overuse.