Consider the case of a large country that imposes a specific tariff on wheat. Wheat has a world price . There is perfect competition. a. The country has been sued in the WTO to abolish its tariff. In response, the country is considering imposing a non-tariff trade barrier in the form of a quota on wheat. A quota does not impose an additional cost on imports like a tariff, but instead mandates a maximum import quantity . Assume that the government auctions off the import licenses for the quota under a fully competitive auction process. Illustrate in the "Home Market / Trade Market" diagram seen in class the effect of a quota on imports, consumer and producer surplus, government revenues, and total welfare. How do these effects compare to an import tariff if the quota is set such that imports are the same under both policies? b. Recent events have reduced the wheat harvest, raising the world price of wheat to . The country would like to understand the effects of this price change on its economy. Illustrate in a carefully drawn diagram the effects of this world price increase on consumer and producer surplus, government revenues, and total welfare