National Gains from a Tariff that Affects Foreigners' Selling Price
(Figure 7.5) Graph B: A nationally optimal tariff

A tariff which maximizes the national welfare gains is called a nationally optimal tariff. In the graph on the right above, the effects of the nationally optimal tariff of $50 are illustrated. The national gains ($25 x 0.67 million = $16.75 million) minus the national losses ($25 x 330,000 = $4.125 million) equal the national gains ($12.625 million) from the imposition of the tariff. Click on the highlighted text in this paragraph in order to show the areas in the graph above. Click index when you are ready to end this module and return to the Key Graphs index.