A Small Country Is Considering Imposing a Tariff on Imported

question 23

Multiple Choice

A small country is considering imposing a tariff on imported wine at the rate of $5 per bottle. Economists have estimated the following based on this tariff amount: $$\begin{array} { l l } \text { World price of wine (free trade) : } & \$ 20 \text { per bottle } \\\text { Domestic production (free trade) : } & 500,000 \text { bottles } \\\text { Domestic production (after tariff) : } & 600,000 \text { bottles } \\\text { Domestic consumption (free trade) : } & 750,000 \text { bottles } \\\text { Domestic consumption (after tariff) : } & 650,000 \text { bottles }\end{array}$$ The imposition of the tariff on wine will cause the surplus of the domestic consumers to _____ by _____.

• A)fall; $10 million
• B)fall; $250,000
• C)fall; $3.5 million
• D)rise; $3.5 million

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