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Economics (AS & A Level) · Oct / Nov 2025 · Paper 12 · Question 30

9708Protectionism

The diagram shows the effect of a government removing the tariff on imports of rice into its country. [Diagram: price of rice vs quantity of rice, with D_domestic, S_domestic, S_world, S_world + tariff; points W, V, R, X, T, U; prices P1, P2; quantities Q1, Q2, Q3, Q4] How would the removal of this tariff affect the consumer surplus and the government's revenue?

  1. Aconsumer surplus increases by VUT; government revenue decreases by WVTX
  2. Bconsumer surplus increases by VUT; government revenue decreases by WVQ3Q2
  3. Cconsumer surplus increases by P1VUP2; government revenue decreases by WVTX
  4. Dconsumer surplus increases by P1VUP2; government revenue decreases by WVQ3Q2

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Correct answer: C. consumer surplus increases by P1VUP2; government revenue decreases by WVTX

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