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The Graph Above Shows Domestic Supply and Demand with Trade

Question 31

Multiple Choice

The graph above shows domestic supply and demand with trade in a SMALL country.With trade,this country can purchase at the world price,Pw. Suppose that this country imposes a $5 per unit tariff on this good.Which of the following is true? A) The domestic price will rise by $5. B) Consumers will be better off. C) There will not be deadweight losses due to this tariff, since it is a small country. D) Producers will not increase domestic production.
The graph above shows domestic supply and demand with trade in a SMALL country.With trade,this country can purchase at the world price,Pw.
Suppose that this country imposes a $5 per unit tariff on this good.Which of the following is true?


A) The domestic price will rise by $5.
B) Consumers will be better off.
C) There will not be deadweight losses due to this tariff, since it is a small country.
D) Producers will not increase domestic production.

Correct Answer:

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