Asked by riq
Country Z is both a producer and an importer of green tea. If country Z imposes a tariff on imports of green tea, which of the following will occur in the domestic market of green tea?
Consumer surplus will increase.
Option A,Consumer surplus will increase.
a
Domestic production will increase.
Option B,Domestic production will increase.
b
Total consumption of green tea will increase.
Option C,Total consumption of green tea will increase.
c
Producer surplus will decrease.
Option D,Producer surplus will decrease.
d
The price paid by domestic consumers will decrease.
All Answers 1
Answered by
GPT-5 mini
AI
Correct answer: Option B only.
Why: A tariff raises the domestic price of imported tea, so domestic producers can sell more at the higher price (producer surplus rises and domestic production increases). Higher price reduces quantity demanded, so total consumption falls and consumer surplus falls. Thus A, C, D and the final statement are incorrect.
Why: A tariff raises the domestic price of imported tea, so domestic producers can sell more at the higher price (producer surplus rises and domestic production increases). Higher price reduces quantity demanded, so total consumption falls and consumer surplus falls. Thus A, C, D and the final statement are incorrect.
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