3. Welfare effects of a tariff in a small country Suppose Guatemala is open to free trade in the world market for maize. Since Guatemala is small relative to the international market, the deman and supply of maize in Guatemala have no impact on the world price. The following graph shows the domestic market for maize in Guatemala. Tk world price of a ton of maize is Py = $800. On the following graph, use the green triangle (triangle symbols) to shade the area representing consumer surplus (CS) when the economy is at free-trade equilibrium. Then, use the purple triangle (diamond symbols) to shade the area representing producer surpius (PS). 'Y &) 1280 Domestic Demand Domestic Supply 1220 1160 1100 1040 980 920 PRICE (Dollars per ton) 860 800 740 680 4+4t+F+F++++ 0 25 50 75 100 125 150 175 200 225 250 QUANTITY (Tons of maize) Because Guatemala participates in international trade in the market for maize, it will import 150 | tons of maize. Now suppose the Guatemalan government decides to impose a tariff of $60 on each imported ton of maize. Under the tariff, the price Guatemalai consumers pay for a ton of maize becomes $860 |, and Guatemala will import tons of maize. Use the following graph to show the effects of the $60 tariff. Use the black line (plus symbol) to indicate the world price plus the tariff. Then, use the green points (triangle symbols) to show the consumer st with the tariff and the purple triangle (diamond symbols) to show the producer surplus with the tariff. Lastly, use the orange quadrilateral (squar symbols) to shade the area representing government revenue received from the tariff and the tan points (rectangle symbols) to shade the areas representing deadweight loss (DWL) caused by the tariff. o)\\ @) e