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The figure below illustrates a situation where there is trade and a tariff. On the graph, Q represents quantity and P represents price. Suppose the
The figure below illustrates a situation where there is trade and a tariff. On the graph, Q represents quantity and P represents price. Suppose the initial situation is one where there is a tariff in place, and the government decides to eliminate it and allow free trade instead. As a result...
A. The market surplus increases by areas D and F
B. The consumer surplus increases by areas B,D and E
C. The government revenue loss is given by areas D and E
D. The producer surplus increases by area D
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