When a country that imports a particular good imposes a tariff on that good,
A)consumer surplus increases and total surplus increases in the market for that good.
B)consumer surplus increases and total surplus decreases in the market for that good.
C)consumer surplus decreases and total surplus increases in the market for that good.
D)consumer surplus decreases and total surplus decreases in the market for that good.

Question

Quizplus · Accepted Answer

A tariff on imported goods makes the price of the imported good more expensive, which reduces the quantity demanded by consumers. This decrease in demand results in lower consumer surplus, as consumers are willing to pay less for the good. Additionally, the increase in price causes a decrease in the quantity supplied, resulting in lower producer surplus. As a result, the imposition of a tariff normally leads to a reduction in total surplus.

When a Country That Imports a Particular Good Imposes a Tariff