Refer to Figure 9.5.1 above. If free trade in sugar is replaced by a $50 tariff on sugar, the effect on domestic producer surplus will be to:

A) lower it by $50.
B) lower it by $12,500.
C) leave it unchanged.
D) raise it by $50.
E) raise it by $12,500.

Producer Surplus

The difference between the amount producers are willing to sell a good for and the amount they actually receive.

Tariff

A tax imposed by a government on goods and services imported from other countries to protect domestic industries.

Sugar

A sweet-tasting, soluble carbohydrate found in many plants and used as a sweetener in food and beverages.