10) An tariff will government revenue, and A) increase; decrease; increase; have

Question

10) An tariff will government revenue, and A) increase; decrease; increase; have an ambiguous effect on producer surplus, consumer surplus. overall domestic national welfare in small economic. C) increase; decrease; have no effect on; have an ambiguous effect on D) increase; decrease; have no effect on; decrease nnras, decrease, have an ambiguous eftet om producer surplus, consumer surplus, 10) An tariff will government revenue, and A) increase; decrease; increase; have an ambiguous effect on B) increase; decrease; decrease; decrease overall domestic national welfare in large economic. increase; decrease; have no effect on; have an ambiguous effect on D) increase; decrease; have no effect on; decrease E) increase; increase; decrease; have an ambiguous effect on

Explanation / Answer

First question is answered below

Correct option: (a)

Reason: Tax on imports (tariffs) will increase producer surplus as imports will fall. Consumer surplus will fall as imports fall and prices rise, government revenue increases as tariff increases tax revenue. Effect on overall national welfare remains ambiguous as some producers are benefitted while some consumers are at loss.

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