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    Consumer Surplus, Producer Surplus, Government Revenue

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    Given the following information pertaining to a small country A with respect to good X under free trade and with a tariff in place

    Price of X under free trade $12
    Ad Valorem tariff 10%
    Production of X under free trade 2,000 units
    Production of X with tariff in place 2,300 units
    Import of X under free trade 600 units
    Import of X with tariff in place 200 units.

    Calculate the changes in:

    Consumer Surplus: -2580
    Producer Surplus: 480
    Government Revenue: 960
    Deadweight losses: -1140.

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    Solution Summary

    Changes in consumer surplus, producer surplus, government revenue and deadweight losses have been calculated given Ad Valorem tariff, production under free trade, production with tariff in place, Import under free trade and Import tariff in place.