Graph 9-8

-In Graph 9-8, as a result of the tariff, deadweight loss would be:
A) E
B) B
C) D + F
D) B + D + E + F

Question

Graph 9-8
 
-In Graph 9-8, as a result of the tariff, deadweight loss would be:
A) E 
B) B 
C) D + F 
D) B + D + E + F

Quizplus · Accepted Answer

Deadweight loss is the area between the supply and demand curves that is lost due to the imposition of a tariff. In Graph 9-8, deadweight loss would be the sum of areas D and F, since those represent the reduction in consumer surplus and producer surplus, respectively, as a result of the tariff. Area E represents the tariff revenue collected by the government, and area B represents the transfer of surplus from domestic producers to the government. They do not contribute to deadweight loss. Therefore, the correct answer is C, which is the sum of areas D and F.

Graph 9-8 -In Graph 9-8, as a Result of the Tariff, Deadweight