A Small Country Is Considering Imposing a Tariff on Imported

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 producers to _____ by _____.

A) rise; $1 million
B) rise; $500,000
C) fall; $2.5 million
D) rise; $2.75 million