Final answer:
The production effect of a tariff increases domestic producers' output due to less competition, while the consumption effect leads to reduced consumption of imports by domestic consumers due to higher prices. Both effects can be represented graphically on supply and demand diagrams and computed using changes in producer and consumer surplus.
Step-by-step explanation:
The production effect of a tariff refers to the impact tariffs have on domestic producers within the country imposing the tariff. Described without diagrams or numbers, it typically results in producers facing less competition from foreign goods, potentially increasing their output to meet local demand. This would be shown on a supply and demand diagram as a shift in the supply curve to the left (or upward), depicting a higher cost for imported goods and therefore a reduced supply of imports. Computation of its value could involve assessing changes in producer surplus, which measures the benefit producers receive by selling at a market price higher than the lowest price they are willing to accept.
The consumption effect of a tariff, on the other hand, reflects the change in the quantity of goods consumed by the residents of the importing country due to the increased price of imported goods caused by the tariff. In simple terms, as tariffs make imported goods more expensive, domestic consumers will likely reduce their consumption of these goods and turn to alternatives. On a supply and demand diagram, this is represented by a movement along the demand curve to a higher price and a lower quantity. To compute this effect, one could look at the change in consumer surplus, which quantifies the perceived benefit consumers receive when they buy goods for less than the highest price they're willing to pay.