(Figure: A Tariff on Oranges in South Africa) Use Figure: A Tariff on Oranges in South Africa.When the government imposes a tariff on imported oranges,the price of oranges in South Africa rises from P_W to P_T and domestic consumer surplus _ to _.

A) falls;F + L
B) falls;F + G + I + J + K + L
C) rises;F + L
D) rises;F + G + I + J + K + L

Question

(Figure: A Tariff on Oranges in South Africa) Use Figure: A Tariff on Oranges in South Africa.When the government imposes a tariff on imported oranges,the price of oranges in South Africa rises from P_W to P_T and domestic consumer surplus _____ to _____.

A) falls;F + L
B) falls;F + G + I + J + K + L
C) rises;F + L
D) rises;F + G + I + J + K + L

Madelyn Anderson · Accepted Answer

Final Answer : A, Explanation :  When the price of oranges increases due to the tariff, the consumer surplus falls because consumers have to pay a higher price for oranges. The areas that are affected by the fall in consumer surplus are F (loss of consumer surplus), and L (cost of government revenue from the tariff). Therefore, choice A is the best answer. The areas G, I, J, and K are not affected by the fall in consumer surplus.

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