Final answer:
Economic analysis of tariffs shows that consumer surplus decreases, producer surplus may increase, but the total social surplus typically decreases, leading to a loss in economic efficiency.
Step-by-step explanation:
The question relates to the impact of tariffs on the economic concept of surplus in international trade scenarios. When a country like New Zealand implements trade barriers such as tariffs, there is a complicated effect on both consumer surplus and producer surplus. Analyzing these changes requires understanding the shifts in supply and demand and how they affect market equilibrium. Specifically, in the provided steps, consumer surplus decreases due to higher prices and reduced quantity of goods available. Producers, on the other hand, may experience an increase in surplus because they sell more at a higher price, despite the overall social surplus diminishing. This ultimately leads to a loss in economic efficiency within the country implementing the trade barrier.
The subject of this question is Social Studies, specifically related to the effects of tariffs on New Zealand's consumer surplus, producer surplus, and total surplus.
When a tariff is implemented, the consumer surplus decreases by the amount represented by X. This means that consumers are paying higher prices for the same quantity of goods, resulting in a smaller surplus for them.
Similarly, the producer surplus decreases by the amount represented by Y. This is because the higher price allowed by the tariff allows producers to sell more at a higher price, but the increase in surplus is smaller than the decrease in consumer surplus.
As a result, the total surplus decreases by the amount represented by Z. In other words, the loss of consumer surplus outweighs the gain in producer surplus, leading to a decrease in the overall social surplus.