For the international trade market for bicycles shown in Figure 8.5, demonstrate that a rather large tariff, for instance, a tariff that resulted in imports of 0.33 million bicycles, would not be an optimal tariff for the importing country.

Data From Figure 8.5

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FIGURE 8.5 A Large Country Imposes a Small Tariff A. The National Market for Bicydes Price ($ per bike) Sa B. The Market for Bicycle Imports Price ($ per bike) 375- b b+d 303. 303. Foreign export supply S, to the United States 300- a Tariff 300 297 297 225 Dd Quantity 1.58 1.6 (millions of bikes) 0 0.6 0.62 M =0.96 Mo= 1.0 U.S. demand for imports Dm=Dd-Sd 0.96 1.0 AM=0.04 Quantity (millions of bikes)