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A. What type of policy is shown here?

B. Before the policy was implemented, consumer surplus was?
C. Before the policy was implemented, producer surplus was?
D. After the policy was implemented, the price became?
E. After the policy, consumer surplus became?
F. As a result of the policy, producer surplus changed by how much?

User Nexus
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1 Answer

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Final answer:

The type of policy shown here is a trade barrier policy. Before the policy was implemented, consumer surplus was larger, while producer surplus was smaller. After the policy was implemented, the price became higher and both consumer surplus and producer surplus changed.

Step-by-step explanation:

The type of policy shown here is a trade barrier policy. Before the policy was implemented, consumer surplus was larger because consumers were paying a lower price and obtaining a higher quantity. Before the policy was implemented, producer surplus was smaller because producers were receiving a lower price and selling a lower quantity.

After the policy was implemented, the price became higher compared to the price before the policy. After the policy, consumer surplus became smaller because consumers were paying a higher price to get a lower quantity. As a result of the policy, producer surplus increased by the area represented by the triangle PNoTrade, E, and D.

User AbdullahR
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