1.1. Suppose the world price of butter is $0.50 per pound and the domestic price in autarky is

$1.00 per pound. Use a diagram similar to Figure 8-10 to show the following.

a. If there is free trade, domestic butter producers want the government to impose a tariff of no less than $0.50 per pound.

b. What happens if a tariff greater than $0.50 per pound is imposed?