Final answer:
An export tariff increases producer surplus and government revenue, but decreases consumer surplus. The overall effect on domestic national welfare is ambiguous due to the larger loss of consumer surplus outweighing the gains of producers.
Step-by-step explanation:
The student's question seems to revolve around the effects of an export tariff on different economic measures. In the scenario presented, when barriers to trade such as export tariffs are imposed, there are several outcomes:
- The producer surplus increases due to domestic producers being able to sell more at higher prices.
- The consumer surplus decreases as consumers now face higher prices and are likely to purchase smaller quantities at these elevated prices, hence reducing their welfare.
- Government revenue may increase due to the collected tariffs.
- The overall domestic national welfare has an ambiguous effect because it depends on the magnitudes of the changes in producer surplus, consumer surplus, and any efficiency losses due to the tariff.
Illustratively, the original producer surplus is represented by the area of the triangle PNoTrade, E, and D. The consumer surplus, on the other hand, once exports are taxed, shrinks to the area of the triangle PNoTrade, E, and B. The net effect of the tariff shows an increase for producers but a larger loss for consumers, leading to a decreased social surplus overall.