The demand and supply for automobiles in a certain country is given in the following graph. (LO2, LO3)

a. Assuming that the economy is closed, find the equilibrium price and production of automobiles.

b. The economy opens to trade. The world price of automobiles is $8,000. Find the domestic quantities demanded and supplied and the quantity of imports or exports. Who will favor the opening of the automobile market to trade, and who will oppose it?

c. The government imposes a tariff of $2,000 per car. Find the effects on domestic quantities demanded and supplied.

d. As a result of the tariff, what will happen to the quantity of imports or exports, and what is the revenue raised by the tariff? Who will favor the imposition of the tariff, and who will oppose it?