Refer to the information provided in Figure 19.4 below to answer the questions that follow.
Figure 19.4
-Refer to Figure 19.4.The domestic price of a leather wallet is $20.With free trade the price of a leather wallet is $10 and after a tariff is imposed the price is $15.After the tariff is imposed,tariff revenue in this country will be

Question

Refer to the information provided in Figure 19.4 below to answer the questions that follow.
  Figure 19.4
-Refer to Figure 19.4.The domestic price of a leather wallet is $20.With free trade the price of a leather wallet is $10 and after a tariff is imposed the price is $15.After the tariff is imposed,tariff revenue in this country will be

Quizplus · Accepted Answer

Before the tariff, the domestic price of a leather wallet is $20, but with free trade, it decreases to $10. Therefore, the tariff rate must be 50% (($20-$10)/$20) to increase the price back up to $15. The quantity of wallets demanded at $15 is 100,000. The total tariff revenue is calculated as follows:

Tariff revenue = tariff rate x quantity demanded at tariff price x tariff price 
Tariff revenue = 0.50 x 100,000 x $5 
Tariff revenue = $250,000

Therefore, the correct answer is C, $500.

Refer to the Information Provided in Figure 19