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Please help; the person who answered my question was very confusing.

Question: 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 bottle

Domestic production (free trade)               500,000 bottles

Domestic production (after tariff)              600,000 bottles

Domestic consumption ( free trade)          750,000 bottles

Domestic consumption ( after tariff)         650,000 bottles

The question I need help answering is as follows:

The impostion of the tariff on wine will cause the surplus of the domestic producers to __ by ___

a.) rise; $1 million

b.) rise; $500,000

c.) fall; $2.5 million

d.) rise; $2.75 million

KM
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