The accompanying diagram illustrates the U.S. domestic demand curve and domestic supply curve for beef. The world
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The accompanying diagram illustrates the U.S. domestic demand curve and domestic supply curve for beef.
The world price of beef is PW. The United States currently imposes an import tariff on beef, so the price of beef is PT.
Congress decides to eliminate the tariff. In terms of the areas marked in the diagram, answer the following questions.
a. With the elimination of the tariff what is the gain/loss in consumer surplus?
b. With the elimination of the tariff what is the gain/loss in producer surplus?
c. With the elimination of the tariff what is the gain/loss to the government?
d. With the elimination of the tariff what is the gain/loss to the economy as a whole?
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