The Effect of a Tariff on Producers
(Figure 8.2)

Now show the imposition of a $30 tariff on bikes by pressing the button to the left. The tariff results in producers being willing to produce more bicycles. Domestic production increases from S0 to S1. Similarly, domestic consumption decreases from D0 to D1 since consumers are willing to buy less given the higher price for bicycles in the market after the tariff. Press the buttons to the left to show how imports have changed.
We will now examine the effect of the tariff on producer surplus. Press the buttons to the left to show producer surplus before and after the tariff is imposed. Finally, press to highlight the producer's gain from the tariff ($21 million). At any time, you can press reset to return to the original graph.

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