Home imposes a specific tariff of 0.5 on wheat imports.

 

Home imposes a specific tariff of 0.5 on wheat imports. Determine and graph the effects of the tariff on the following: 

  •  The price of wheat in each country
  •  The quantity of wheat supplied and demanded in each country 
  •  The volume of trade. 

Determine the effect of the tariff on the welfare of each of the following groups: 

  •  Home import-competing producers
  •  Home consumers
  •  The Home government.

Show graphically and calculate the terms of trade gain, the efficiency loss, and the total effect on welfare of the tariff

 

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