Question

Tariffs result in a decrease in consumer surplus because: Select one: a. the price and the quantity consumed of the protected good increases. b. the price and the quantity consumed of the protected good decreases. c. the price of the protected good increases and quantity consumed decreases. d. the price of the protected good decreases and quantity consumed increases

Answer 1

Answer: Tariffs result in a decrease in the consumer surplus because

the price of the protected good increases and quantity consumed decreases

Explanation:

A tariff is a form of protection used by a country to protect its local industry, prevent dumping, prevent the consumption of certain products and also encourage local production.

Tariffs are imposed on imported goods. When a tariff is imposed on a good, it leads to an increase in the price of the good as producers will want to pass the tax burden to the consumers. Also, due to price increase, there'll be a reduction in the quantity consumed by consumers.