Under a textile consumption tax, the quantity of textiles consumed in Isoland will be quantity produced in Isoland will be the quantity produced under a tariff. The following table shows the effect of an import tariff on the nation of Isoland. Complete the remaining columns of the following table by indicating the effect of the same-sized tax on textile consumption. Under Consumption Tax After Consumer Surplus Producer Surplus Government Revenue Total Surplus Before Tariff or Tax A+B+C+D+E+F G None A+B+C+D+E+F+G Compared to the consumption tax, the tariff raises loss associated with it. Under Tariff After A+B C+G E A+B+C+E+G the quantity consumed under a tariff, and the Change -(C+D+E+F) +C +E - (D+F) revenue for the government and has Change deadweight

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Suppose the nation of Isoland is an importer of textiles and is looking for a way to raise government revenue. The following graph shows the effect of
a tariff on textile imports.
Price of Textiles
C
G
Os
D
I
B
E
052
Op.2
Quantity of Textiles
Supply
Demand:
I
90.1
P
W
Transcribed Image Text:Suppose the nation of Isoland is an importer of textiles and is looking for a way to raise government revenue. The following graph shows the effect of a tariff on textile imports. Price of Textiles C G Os D I B E 052 Op.2 Quantity of Textiles Supply Demand: I 90.1 P W
Having rejected a tariff on textiles (a tax on imports), the president of Isoland is now considering the same-sized tax on textile consumption (including
both imported and domestically produced textiles).
Under a textile consumption tax, the quantity of textiles consumed in Isoland will be
quantity produced in Isoland will be
the quantity produced under a tariff.
The following table shows the effect of an import tariff on the nation of Isoland.
Complete the remaining columns of the following table by indicating the effect of the same-sized tax on textile consumption.
Under Tariff
Under Consumption Tax
Change
After
Consumer Surplus
Producer Surplus
Government Revenue
Total Surplus
Before Tariff or Tax
A+B+C+D+E+F
G
None.
A+B+C+D+E+F+G
Compared to the consumption tax, the tariff raises
loss associated with it.
After
A+B
C+G
E
A+B+C+E+G
the quantity consumed under a tariff, and the
Change
-(C+D+E+F)
+C
+E
- (D+F)
revenue for the government and has
deadweight
Transcribed Image Text:Having rejected a tariff on textiles (a tax on imports), the president of Isoland is now considering the same-sized tax on textile consumption (including both imported and domestically produced textiles). Under a textile consumption tax, the quantity of textiles consumed in Isoland will be quantity produced in Isoland will be the quantity produced under a tariff. The following table shows the effect of an import tariff on the nation of Isoland. Complete the remaining columns of the following table by indicating the effect of the same-sized tax on textile consumption. Under Tariff Under Consumption Tax Change After Consumer Surplus Producer Surplus Government Revenue Total Surplus Before Tariff or Tax A+B+C+D+E+F G None. A+B+C+D+E+F+G Compared to the consumption tax, the tariff raises loss associated with it. After A+B C+G E A+B+C+E+G the quantity consumed under a tariff, and the Change -(C+D+E+F) +C +E - (D+F) revenue for the government and has deadweight
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