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Price ($ per lamp) Domestic Price with tariff World Price D Quantity (thousands of lamps per year) Figure 1: The market for lamps. Question 2A.

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Price ($ per lamp) Domestic Price with tariff World Price D Quantity (thousands of lamps per year) Figure 1: The market for lamps. Question 2A. In the diagram above: a. The production effect of the tariff is the area: b. The consumption effect of the tariff is the area: c. Government revenue from the tariff is represented by the area: d. The gain in producer surplus that results from the tariff is represented by the area: e. The loss in consumer surplus that results from the tariff is represented by the area: (2) Question 2B. Fill in the blanks. a. The welfare loss to consumers in the importing country that results from them reducing their consumption after the tariff is imposed is called b. The welfare loss to the economy that results from consumers shifting from imports to more expensive domestic production is called c. The change in the ratio of international prices of a large country's exports to the interna- tional price of the large country's imports resulting from the imposition of a tariff in the country leads to a welfare gain to the large country which is termed

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