Suppose a Certain Country Imposes a Tariff on a Good

question 209

Multiple Choice

Suppose a certain country imposes a tariff on a good.Which of the following results of the tariff is possible?

• A)Consumer surplus decreases by $100;producer surplus increases by $100;and government revenue from the tariff amounts to $50.
• B)Consumer surplus decreases by $200;producer surplus increases by $100;and government revenue from the tariff amounts to $50.
• C)Consumer surplus increases by $100;producer surplus decreases by $200;and government revenue from the tariff amounts to $50.
• D)Consumer surplus decreases by $50;producer surplus increases by $200;and government revenue from the tariff amounts to $150.

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Definitions:

Net Cash Inflow

The excess of cash receipts over cash disbursements during a certain period, reflecting the liquidity generated from operations.

Cash Payback Period

The duration it takes for an investment to generate an amount of cash equal to the initial investment cost.

Net Income

The overall income a company retains following the subtraction of all costs and tax obligations from its earnings.

Net Cash Inflows

The total amount of cash received minus the total amount of cash outflows over a specified period.