The Net National Loss from a Tariff in Two Equivalent Diagrams
(Figure 7.4)

The net loss in consumer surplus that was illustrated in the previous page is distributed amongst: increased producer surplus (area a), government tariff revenue (area c), and deadweight losses (areas b+d). Area b is the production effect, an efficiency loss due to increased costs of shifting to more expensive home production. Area d is the consumption effect, the loss to consumers due to the reduction in their total consumption of bicycles. The net national loss from the tariff is the deadweight losses (areas b+d). Click on the highlighted text in this paragraph in order to show the areas in the graph above. Click continue when you are ready to move on to the next page.