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Mexico Has Imposed a Tariff on the Importation of Chocolate

Question 26

Multiple Choice

Mexico has imposed a tariff on the importation of chocolate.As a consequence of the tariff,


A) ​Mexico as a whole is better off,since the tariff increases employment and production in the domestic chocolate industry.
B) ​Mexico as a whole is better off,since the tariff results in tax revenue for the Mexican government.
C) ​Mexico as a whole is worse off,since producer surplus and consumer surplus both decrease.
D) ​Mexico as a whole is worse off,since the increase in producer surplus is smaller than the drop in consumer surplus plus tariff revenues.

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