The figure given below shows the U.S. market for imported wine. For simplicity, we consider export supply curves to be flat. Chilean wine is available for $480 per barrel and French wine is available for $420 per barrel. Suppose the United States has a tariff of $80 per barrel on imported wine. Then, the United States joins a trade bloc with Chile. What is the net effect on the U.S. well-being of joining the trade bloc?
A)The national welfare increases by $50 million.
B)The national welfare decreases by $550 million.
C)The national welfare decreases by $800 million.
D)The national welfare increases by $250 billion.

Question

The figure given below shows the U.S. market for imported wine. For simplicity, we consider export supply curves to be flat. Chilean wine is available for $480 per barrel and French wine is available for $420 per barrel.  Suppose the United States has a tariff of $80 per barrel on imported wine. Then, the United States joins a trade bloc with Chile. What is the net effect on the U.S. well-being of joining the trade bloc?
A)The national welfare increases by $50 million. 
B)The national welfare decreases by $550 million. 
C)The national welfare decreases by $800 million. 
D)The national welfare increases by $250 billion.

Quizplus · Accepted Answer

The Answer of The figure given below shows the U.S. market for imported wine. For simplicity, we consider export supply curves to be flat. Chilean wine is available for $480 per barrel and French wine is available for $420 per barrel.  Suppose the United States has a tariff of $80 per barrel on imported wine. Then, the United States joins a trade bloc with Chile. What is the net effect on the U.S. well-being of joining the trade bloc?
A)The national welfare increases by $50 million. 
B)The national welfare decreases by $550 million. 
C)The national welfare decreases by $800 million. 
D)The national welfare increases by $250 billion.

The Figure Given Below Shows the U