Reference: Ref 9-6 (Figure: World Imports) Refer to the figure. The imposition of a $20 tariff would generate a value of lost gains from trade of:

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The value of lost gains from trade due to the imposition of a $20 tariff is equal to the triangle formed by the new price line, the old price line, and the quantity axis. In this case, the height of the triangle is $30 (the old price minus the new price), and the base is 3 units of quantity. Therefore, the area of the triangle is (1/2) x 30 x 3 = $45. However, since the tariff revenue is $25 ($20 tariff x 1.25 units of quantity), the actual lost gains from trade is $45 - $25 = $20. So the imposition of a $20 tariff would generate a value of lost gains from trade of $20, which is closest to option B.

Reference: Ref 9-6 (Figure: World Imports) Refer to the Figure