Figure 9-22
The following diagram shows the domestic demand and domestic supply in a market.In addition,assume that the world price in this market is $40 per unit.
-Refer to Figure 9-22.Suppose the government imposes a tariff of $20 per unit.The deadweight loss caused by the tariff is
A)$6,000.
B)$9,000.
C)$12,000.
D)$15,000.

Question

Figure 9-22
The following diagram shows the domestic demand and domestic supply in a market.In addition,assume that the world price in this market is $40 per unit. 
-Refer to Figure 9-22.Suppose the government imposes a tariff of $20 per unit.The deadweight loss caused by the tariff is
A)$6,000. 
B)$9,000. 
C)$12,000. 
D)$15,000.

Quizplus · Accepted Answer

The deadweight loss is the area of the triangle formed by the difference between the price with and without the tariff and the quantity demanded with and without the tariff. In this case, the price with the tariff is $20 higher than the price without the tariff, and the quantity demanded with the tariff is 300 units less than the quantity demanded without the tariff. Therefore, the deadweight loss is (1/2) * $20 * 300 = $6,000.

Figure 9-22 The Following Diagram Shows the Domestic Demand and Domestic Supply