Question

Question 5 Welfare for a country is equal to consumer surplus consumer surplus minus producer surplus consumer surplus plus producer Surplus plus tariffrevenues consumer surplus plus producer Surplus minus tariff revenues Question 6 Use the graph below to answer this question: In autarky (before trade) consumer surplus is the area represented by the letter(s) (For this question and the following ones that use the same graph. Sis domestic supply. Dis domestic demand Pw is the world price is the tarif)

Answer 1

Q5.

The welfare of a country is measured as the sum total of consumer surplus, producer surplus as well as the tariff revenue for the government.

Welfare of a country = Consumer Surplus + Producer Surplus + Tariff Revenue

Consumer surplus denoted the welfare of the consumers

Producer Surplus denotes the welfare of the producers

Tariff Revenue is the welfare of the government (indirectly the welfare received by these funds spent by the government for the welfare of its residents)

Ans: consumer surplus plus producer surplus plus tariff revenue