Use the Following to Answer Questions

question 39

Multiple Choice

Use the following to answer questions:
Figure: The Market for Calculators
-(Figure: The Market for Calculators) Look at the 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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