Consider the case of a country introducing a tariff on imports of automobiles

a) Sketch a graph that shows the effect of the tariff on the equilibrium price.

b) Denoting areas on the graph (clearly label areas on the graph), describe how the introduction of the tariff affects consumer surplus.

c) Is there a loss in welfare from the introduction of the tariff? Provide a justification for your answer.

d) Now consider the case of an import quota. Describe how this differs from a tariff.

e) Describe why a government might prefer to introduce a tariff rather than an import quota