The Following Figure Shows the Domestic Demand and Supply Curves

question 10

Multiple Choice

The following figure shows the domestic demand and supply curves for a good. With free trade, the price of the good in the domestic market is P₃. The government introduces a 5% tariff in the market which raises the domestic price to P₂.
Figure 7-1

-Refer to Figure 7-1. If the government substitutes the tariff for a quota that raises the price in the domestic price to P2, the deadweight loss in the market would be equal to:

• A) the area of GHLM.
• B) the area of GHKJ.
• C) the area of HMK.
• D) the area of JGL.
• E) the area of JGL + HMK.

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Definitions:

Hyaline Cartilage

A type of strong yet flexible cartilage found in various parts of the body such as the joints, rib cage, and nose, noteworthy for its glossy, translucent appearance.

Thick

Thick refers to something with a greater cross-sectional dimension or consistency, often in comparison to something else that is thin or slim.

Flat Epithelium

Flat epithelium, also known as squamous epithelium, comprises a single layer of flat, scale-like cells lining surfaces involved in passive diffusion, such as blood vessels and air sacs of the lungs.

Goblet Cells

Epithelial cells that produce mucus, which serves as a protective lubricant lining various internal surfaces.