FIGURE 20-10 The Effect of a Tariff
imageA tariff raises the domestic price of the good from PW to PT. The domestic quantity demanded shrinks from QD to QDT, and the domestic quantity supplied increases from QS to QST. As a result, importsā€”which had been QD āˆ’ QS before the tariff was imposedā€”shrink to QDT āˆ’ QST after the tariff is imposed.