Tariff Effects on Production and Revenue

Steps:

• Domestic production rises to where supply curve intersects price Pw + t, at quantity Q2.
• Consumer quantity falls to where demand curve intersects Pw + t, at Q3.
• Imports equal Q3 - Q2.
• Tariff revenue is t times imports, forming rectangle OJKN on the graph.

Why A is correct:

• Domestic output is Q2 per standard tariff model; revenue is rectangular area t × (Q3 - Q2), labeled OJKN.

Why the others are wrong:

• B: Q3 is post-tariff consumption, not production; QJMN misidentifies revenue area.
• C: KLNE represents deadweight loss, not revenue.
• D: Q3 is consumption; KL + NE combines loss triangles, not revenue.

Final answer: A