In the 1950s, Ford and General Motors established a small car­producing industry in Australia and argued for a high tariff on car imports. The tariff has remained through the years. Until 2000, the tariff was 22.5 percent. What might have been Ford’s and General Motors’ argument for the high tariff? Is the tariff the best way to achieve the goals of the argument?

Use Figure 1 and the following information to work Problems 7 to 9.

Figure 1 shows the car market in Mexico when Mexico places no restriction on the quantity of cars imported. The world price of a car is $10,000.