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A-Level Economics · Tariff diagram question

Which area is the government's TARIFF REVENUE?

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The diagram

The answer

The area H J C B. Tariff per unit (PW+T − PW) × the units still imported (Q₃ to Q₄) — rectangle HJCB. Revenue is price × quantity, so a rectangle. The government only collects on units that still cross the border. Revenue = the tariff per unit multiplied by imports (Q₃ to Q₄) = rectangle HJCB. George's heuristic for reading any of these diagrams: if it's revenue it's a rectangle; if it's surplus it's a triangle. Say 'that's the revenue box' and you've anchored the tax-revenue argument to the diagram.

Test yourself properly

This is one of 6 questions on the tariff diagram — every corner lettered, every wrong answer diagnosed.

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