FIGURE 20-10 The Effect of a Tariff

A 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, import
sāwhich had been QD ā QS before the tariff was imposedāshrink to QDT ā QST after the tariff is imposed.