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: World price of wine (free trade):$20 per bottleDomestic production (free trade):500,000 bottlesDomestic production (after tariff):600,000 bottlesDomestic consumption (free trade):750,000 bottlesDomestic consumption (after tariff):650,000 bottles The production effect of the tariff on wine is worth about
A. $250,000.
B. $2.75 million.
C. $500,000.
D. $2.5 million.
Answer: A
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