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3) Tariff (small country): Let the domestic government enact a tariff equal to $10 (T = 10). Assume that the world price is $30, (Pw
3) Tariff (small country): Let the domestic government enact a tariff equal to $10 (T = 10). Assume that the world price is $30, (Pw = 30). Draw a graph for this new situation. Label the areas of the graph with lower case letter as we did in class. Now compute the new levels of domestic consumption, production and imports (use the demand and supply equations with the price plus tariff). Compute also, the loss of consumer surplus, the gain of producer surplus, the consumption and production distortion losses, and government revenues. Is there a net gain or loss
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