which of the following is true? A. The gain of tariff revenue = area 1. B.The loss of consumer surplus is the sum of the areas 2 + 4. C. The gain of producer surplus = area 3. D. The loss of consumer surplus is the sum of the areas 1 + 2 + 3 + 4.

which of the following is true? A. The gain of tariff revenue = area 1. B.The loss of consumer surplus is the sum of the areas 2 + 4. C. The gain of producer surplus = area 3. D. The loss of consumer surplus is the sum of the areas 1 + 2 + 3 + 4.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

which of the following is true?

A. The gain of tariff revenue = area 1.

B.The loss of consumer surplus is the sum of the areas 2 + 4.

C. The gain of producer surplus = area 3.

D. The loss of consumer surplus is the sum of the areas 1 + 2 + 3 + 4.

Price
Pd
Pw
1
:Q0
2
3
Q2
Quantity of Steel
lod
4
EQ3
:Q1
S
D

Consumer’s gain from trade. The consumer surplus is the area below the demand curve but above the equilibrium price and up to the equilibrium quantity. Consumer surplus is represented by area A.

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