### Tariff Impact on Producer Surplus**Graph Explanation:**The graph illustrates the supply and demand of saddles with domestic market considerations. It includes a tariff effect, which impacts the producer surplus and world price level.- **Axes**: - The vertical axis represents the "Price per Saddle." - The horizontal axis represents the "Quantity of Saddles."- **Lines**: - The **Domestic Supply** line slopes upward from left to right. - The **Domestic Demand** line slopes downward from left to right.- **Price Points**: - $ P_1 $ indicates the initial world price without a tariff. - $ P_2 $ indicates the new higher price with the tariff applied.- **Areas**: - **Producer Surplus Changes**: - Before Tariff: Areas $ A $ and $ B $ represent total producer surplus. - After Tariff: Additional area $ C $ is gained due to the tariff. - **Consumer Surplus Changes**: - Areas $ D $, $ E $, and $ F $ indicate changes in consumer surplus as a result of the tariff. - $ G $ represents the change in quantity due to the tariff.- **Quantity Points**: - $ Q_1 $, $ Q_2 $ indicate the quantities before the tariff. - $ Q_3 $, $ Q_4 $ show adjusted quantities after the tariff effects.**Question:**What is the new amount of Producer Surplus gained as a result of the tariff?- $ A + B $- $ G + C $- $ G + C - D $- $ C $The correct additional producer surplus gained due to the tariff is represented by area $ C $.

Equilibrium is achieved at the output level where Qs equals Qd.

Answered: Price Domeslic Supply per Saddle A B.…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

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Price Domeslic Supply per Saddle A B. P2 Tariff World Price E P1 Domestic Demand Q1 Q2 Q3 Q4 Quantity of Saddles What is the new amount of Producer Surplus gained as a result of th A + B O G + C OG+ C - D