2. The US demandand supply curves for wheat is

D^US = 100 - 20P.

S^US = 20 + 20P.

France supply and demand curves of wheat are

D^F = 80 - 20P.

S^F = 40 + 20P.

2.1. Derive the excesssupply and excess demand

2.2. Determine the world price and the quantity of wheat traded at that price.

The US imposes a specific tariff of 0.5 on wheat imports.

2.3. Determine and graph the effects of the tariff on the following: (1) the price of wheat in each country; (2) the quantity of wheat supplied and demanded in each country; (3) the volume of trade.

2.4. Determine the effects of the tariff on the welfare of each of the following groups: (1) US import-competing producers; (2) US consumers; (3) the US government.

2.5. Show graphically and calculate the terms of trade gain, the efficiency loss, and the total effect on welfare of the tariff.