Consider the picture below. P is the world price in the market for bicycles. The government...

 

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Consider the picture below. Pº is the world price in the market for bicycles. The government institutes a tariff raising price to P¹. From the options below choose the correct statement. P P pl pº a 6.0 g e P 91 92 The bicycle market f с b 93 94 Dom Supply World price Dom demand q a) Prior to the tariff, consumer surplus was areas g+f+c. After the tariff is implemented, consumer surplus is g+f. b) Before the tariff, government revenue was zero and consumer surplus was g+fte+d+c+b; after the tariff, deadweight loss is areas d and b. c) Before the tariff, producer surplus is a; after the tariff, producer surplus is ate and deadweight loss is area d. d) Before the tariff, consumer surplus is g+f+c+d+b; after the tariff is implemented, producer surplus is area ate and government revenue is area c. Consider the picture below. Pº is the world price in the market for bicycles. The government institutes a tariff raising price to P¹. From the options below choose the correct statement. P P pl pº a 6.0 g e P 91 92 The bicycle market f с b 93 94 Dom Supply World price Dom demand q a) Prior to the tariff, consumer surplus was areas g+f+c. After the tariff is implemented, consumer surplus is g+f. b) Before the tariff, government revenue was zero and consumer surplus was g+fte+d+c+b; after the tariff, deadweight loss is areas d and b. c) Before the tariff, producer surplus is a; after the tariff, producer surplus is ate and deadweight loss is area d. d) Before the tariff, consumer surplus is g+f+c+d+b; after the tariff is implemented, producer surplus is area ate and government revenue is area c.

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Step 1 Consumer excess is areas gfc prior to the tariffs implementation Step 2 Consumer surplus incr... View the full answer