Consider the competitive Nigerian markets for peanuts, which are a homogenous good. The demand for peanuts by Nigerian consumers is PD(Q) = 20 - 2Q. The supply of peanuts by Nigerian producers is characterized by PS(Q) = 4 + 2Q.

1. What are the equilibrium price and quantity of peanuts in Nigeria under autarky?
2. Peanuts are also produced and sold in other countries around the world. Assume that the Nigerian peanuts market is small relative to the world market. Suppose that Nigeria opens up to trade and the world price for peanuts is Pw = $8. Would Nigeria import or export peanuts? What is the equilibrium quantity of peanuts consumed, produced, and traded?
3. What are the consumer surplus, producer surplus, and total social surplus (sum of consumer surplus and producer surplus) generated in this equilibrium?
4. Now suppose that Nigeria imposes a tariff of $2 for every unit of peanuts. What is the new price for peanuts? What is the new equilibrium quantity of peanuts consumed, produced, and traded?
5. What are the consumer surplus, producer surplus, and tariff revenue generated in this equilibrium?

6.What are the changes in consumer surplus, producer surplus, and tariff revenue after the tariff? Is Nigeria better off or worse off under this tariff?

7.Draw Nigeria's market for peanuts below. Include the demand and supply curve (label the both the intercepts and slopes). Label the autarky equilibrium as A.

8.Indicate the world price for peanuts in the graph below (PW). Label the free trade equilibrium quantity of peanuts consumed, produced, and traded with the answers you derived earlier.

9.Indicate the tariff and the new price for peanuts in the graph below. Label the new equilibrium quantity of peanuts consumed, produced, and traded with the answers you derived earlier.