Figure 9-17
-Refer to Figure 9-17.With trade and a tariff,consumer surplus is
A)$808 and producer surplus is $200.
B)$808 and producer surplus is $392.
C)$1,024 and producer surplus is $200.
D)$1,024 and producer surplus is $392.

Question

Figure 9-17 
-Refer to Figure 9-17.With trade and a tariff,consumer surplus is
A)$808 and producer surplus is $200. 
B)$808 and producer surplus is $392. 
C)$1,024 and producer surplus is $200. 
D)$1,024 and producer surplus is $392.

Quizplus · Accepted Answer

In the presence of trade and a tariff, consumer surplus is the area above the world price and below the demand curve, but below the equilibrium price and above the demand curve. In this case, consumer surplus is $1,024-$632 = $392.

Similarly, producer surplus is the area above the world price but below the equilibrium price and above the supply curve. In this case, producer surplus is $632-$240 = $392.

Thus, the correct choice is D, as consumer surplus is $1,024 and producer surplus is $392 in the presence of trade and a tariff.

Figure 9-17 -Refer to Figure 9-17.With Trade and a Tariff,consumer Surplus Is