Suppose That a Tariff Increases Domestic Production of a Good

Multiple Choice

Suppose that a tariff increases domestic production of a good from 25 million units to 75 million units and raises the domestic price by $1.50. Assuming a linear domestic supply curve and a perfectly elastic world supply curve, what is the value of the resources wasted by increased domestic production?

A) $37.5 million
B) $50 million
C) $75 million
D) $150 million