Tariff Increases Domestic Producer Revenue Steps:

• Diagram shows domestic output at $10 world price is 20 million units.
• At $14 tariff price, domestic output rises to 30 million units.
• Original revenue: 20 million units × $10 =$200 million.
• New revenue: 30 million units × $14 =$420 million.
• Revenue increase: $420 million -$200 million = $220 million.

Why C is correct:

• $220 million equals the exact rise in producer revenue from higher price and expanded output.

Why the others are wrong:

• A: $120 million understates by using price rise only on new output (4 × 30 million).
• B: $160 million misapplies price rise to incorrect quantity (4 × 40 million).
• D: $280 million overstates via flawed calculation like full new price on old output (14 × 20 million).

Final answer: C