Question

Suppose a small country imposes an import tariff on a good. Which of the following statements is false?

• A. Consumer surplus from the goods will decrease.
• B. Producer surplus from the goods will decrease.
• C. Producer surplus from the goods will increase.
• D. Decrease in quantity imported

Hint:

Who is helped and hurt by import tariffs?

Answer 1

The Correct Option is B

An *import tariff* raises imported goods' prices, benefiting domestic producers through increased market share and producer surplus.

Conversely, consumer surplus falls due to higher consumer prices, and import quantities decline.

Consequently, statement (b) is incorrect. Thus, (b) is the correct answer.