Question

Suppose a small country imposes an import tariff on a good. Which of the following statements is false?

• A. Consumer surplus from the goods will decrease.
• B. Producer surplus from the goods will decrease.
• C. Producer surplus from the goods will increase.
• D. Decrease in quantity imported

Hint:

Who is helped and hurt by import tariffs?

Answer 1

The Correct Option is B

An *import tariff* increases the price of imported goods, which benefits domestic producers by increasing their market share and producer surplus.

However, consumer surplus will decrease as consumers pay higher prices, and the quantity imported will fall.

Therefore, the statement (b) is false. Hence, the correct answer is (b).