Having rejected a tariff on textiles (a tax on imports), the president of Isoland is now considering the same-sized tax on textile consumption (including both imported and domestically produced textiles).

Under a textile consumption tax, the quantity of textiles consumed in Isoland isA.QD,2 or B. QD,1, and the quantity produced in Isoland isA. Qs,1 or B. Qs,2 .

The following table shows the effect of an import tariff on the nation of Isoland.

The A. tariff or B. consumption tax raises more revenue for the government, and the A. tariff or B. consumption tax

Under Tariff Under Consumption Tax Before Tariff or Tax After Change After Change Consumer A + B + C+ D +E+F A + B - (C + D + E + F) Surplus Producer Surplus G C + G +C Government None E +E Revenue Total Surplus A + B + C+ D+ E +F+G A+B +C+E+G - (D + F)