Final answer:
When the United States places a tariff on imported Brazilian ipe, the domestic price of lumber will rise. Consumer surplus will fall as consumers have to pay more for lumber. Meanwhile, producer surplus will rise as domestic producers can sell more lumber at a higher price.
Step-by-step explanation:
When the United States places a tariff on imported Brazilian ipe, the domestic price of lumber will rise. This is because the tariff makes imported lumber more expensive for consumers, so they will instead choose to buy domestic lumber. The increase in demand for domestic lumber will lead to a rise in the price.
As a result of the tariff, consumer surplus will fall. Consumer surplus is the difference between the price consumers are willing to pay and the price they actually pay. With the higher price of lumber due to the tariff, consumers will have to pay more and their surplus will decrease.
On the other hand, producer surplus will rise. Producer surplus is the difference between the price suppliers are willing to sell at and the price they actually receive. With the increase in demand for domestic lumber, producers will be able to sell more at a higher price, increasing their surplus.