Domestic supply is S(P) = P 2 where P is the domestic price The world price is P = 20. The domestic demand is D(P) = 80 2P. Assume that consuming the good pollutes the environment and creates a social cost (SC) of $5 per unit of consumption. a. What is the level of consumption under free trade? Is it too high or too low relative to the optimum? Depict the level of social welfare (CS+PS+SC) in a diagram. b. Show the welfare change with a tariff of $5 per unit. c. What is the level of welfare with a consumption tax of $10 per unit? Compare the welfare levels under the two policies (consumption tax and tariff) and explain the intuition behind your answer. d. What does the theory of targeting suggest the optimal policy would be? Are the results you got consistent with targeting?