Suppose Iran Imposes a Tariff on Lumber

question 227

Multiple Choice

Suppose Iran imposes a tariff on lumber.For the tariff to have any effect,it must be the case that

• A)Iran is an exporter of lumber.
• B)the domestic quantity of lumber supplied exceeds the domestic quantity of lumber demanded at the world price without the tariff.
• C)the world price without the tariff is less than the price of lumber without trade.
• D)the world price without the tariff is greater than the price of lumber without trade.

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Definitions:

Total Surplus

The sum of consumer and producer surplus, representing the total benefit to society from a market transaction.

Equilibrium

The state in a market where supply equals demand, leading to a stable price for a given good or service.

Consumer Surplus

The difference in what consumers think to pay for a good or service and the actual amount they pay.

Equilibrium

A condition where the supply and demand in the market are equal, leading to stable prices.