WGU Global-Economics-for-Managers Exam - Topic 1 Question 3 Discussion

An import tariff raises the domestic price of imported furniture, which reduces consumer surplus. Option A is correct. Consumer surplus is the difference between what buyers are willing to pay and what they actually pay. When a tariff increases the market price, consumers pay more and typically buy less. This reduces the benefit consumers receive from participating in the market. Domestic producers may gain producer surplus, and the government may collect tariff revenue, but consumers lose because prices rise and available choices may shrink. Option B is too weak because the standard tariff effect on consumer surplus is a decrease. Option C is wrong because tariffs change prices and quantities. Option D is the opposite of the expected effect. Tariffs redistribute welfare away from consumers.