The Figure Given Below Shows the U

question 46

Multiple Choice

The figure given below shows the U.S. market for imported wine. For simplicity, we consider export supply curves to be flat. Chilean wine is available for $480 per barrel and French wine is available for $420 per barrel. Suppose the United States has a tariff of $80 per barrel on imported wine. Then, the United States joins a trade bloc with Chile. What is the net effect on the U.S. well-being of joining the trade bloc?

• A)The national welfare increases by $50 million.
• B)The national welfare decreases by $550 million.
• C)The national welfare decreases by $800 million.
• D)The national welfare increases by $250 billion.

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