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15) Suppose that the government intends to impose tariff on bananas after successful lobbying efforts by domestic firms. The price after the tariff is now
15) Suppose that the government intends to impose tariff on bananas after successful lobbying efforts by domestic firms. The price after the tariff is now Pw+t . What is the producer surplus? Sidenote: notice here that when price= Pw+t , part of the consumer surplus when price = Pw is now producer surplus. Tariff may be desirable if the country wants to protect certain infant or key sectors at the cost of lower consumer surplus and creating deadweight loss. A) C+G B) C+D C) C D) G
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