The following graph shows U.S. demand for and domestic supply of a good. Suppose theworld price of the good is $1.00 per unit and a specific tariff of $0.50 per unit is imposed oneach unit of imported good. In such a case, the gain in producer surplus as a result of a tariffof $0.50 per unit is represented by the areaFigure 19.2Priceper unita$2.001.501.00Quantity(units)35 50 65 75 85O hO c+gO cO c+hO g

Producer surplus is the area below the price and above the supply curve.

The following graph shows U.S. demand for and domestic supply of a good. Suppose the world price of the good is $1.00 per unit and a specific tariff of $0.50 per unit is imposed o each unit of imported good. In such a case, the gain in producer surplus as a result of a tari of $0.50 per unit is represented by the area Figure 19.2 Price per unit $2.00 b 1.50 IP 1.00 Ihigl I |||| | D Quantity (units) 35 50 65 75 85

The following graph shows U.S. demand for and domestic supply of a good. Suppose the world price of the good is $1.00 per unit and a specific tariff of $0.50 per unit is imposed o each unit of imported good. In such a case, the gain in producer surplus as a result of a tari of $0.50 per unit is represented by the area Figure 19.2 Price per unit $2.00 b 1.50 IP 1.00 Ihigl I |||| | D Quantity (units) 35 50 65 75 85

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter34: Globalization And Protectionism

Section: Chapter Questions

Problem 38CTQ: Show graphically that for any tariff, there is an equivalent quota that would give the same result....

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