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Refer to the Graph Shown for a Small Country That

Question 61

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Refer to the graph shown for a small country that is a price taker internationally. Refer to the graph shown for a small country that is a price taker internationally. Assume the foreign supply of this product is perfectly elastic at a price of $4 per unit. Starting from a free trade equilibrium, a tariff in the amount of $2 per unit would be expected to cause domestic consumption to: A) increase from 2,400 to 7,400. B) increase from 2,400 to 3,600. C) decrease from 4,800 to 3,600. D) decrease from 7,400 to 6,100. Assume the foreign supply of this product is perfectly elastic at a price of $4 per unit. Starting from a free trade equilibrium, a tariff in the amount of $2 per unit would be expected to cause domestic consumption to:


A) increase from 2,400 to 7,400.
B) increase from 2,400 to 3,600.
C) decrease from 4,800 to 3,600.
D) decrease from 7,400 to 6,100.

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