A country has a monopoly that is protected by a specific tariff, t, on imported goods. The monopoly’s profit-maximizing price is p*. The world price of the good is p_w, which is less than p*. Because the price of imported goods with the tariff is p_w + t, no foreign goods are imported. Under WTO pressure the government removes the tariff so that the supply of foreign goods to the country’s consumers is horizontal at p_w. Show how much the former monopoly produces and what price it charges. Show who gains and who loses from removing the tariff?