If the Government Eliminated Tariffs

question 141

Multiple Choice

If the government eliminated tariffs:

• A) the gains in consumer surplus would outweigh the losses in producer surplus.
• B) the gains in producer surplus would outweigh the losses in consumer surplus.
• C) the gains in consumer surplus would equal the losses in producer surplus.
• D) the gains in producer surplus would equal the gains in consumer surplus.

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Definitions:

Consumer Surplus

The discrepancy between the aggregate amount buyers are willing and capable of paying for a good or service versus what they really pay.

Market Supply

The total amount of a specific good or service available for purchase at any given price, from all producers combined.

Price Elasticity

A measure of how much the quantity demanded of a good responds to a change in the price of that good, reflecting the good's sensitivity to price changes.

Market Supply

Refers to the total amount of a product that producers are willing and able to sell at a given price over a certain period of time.