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1200 Domestic Demand Domestic Supply + 1100 World Price Plus Tariff 1000 800 CS 700 PRICE (Dollars per ton) 600 PS 500 PW 400 Government Revenue 300 200 20 40 80 30 100 120 140 160 180 200 DWL QUANTITY (Tons of wheat) Complete the following table to summarize your results from the previous two graphs. With Free Trade With a Tariff (Dollars) (Dollars) Consumer Surplus Producer Surplus Government Revenue Based on your analysis, as a result of the tariff, Honduras's consumer surplus by 5 J. producer surplus by 5 , and the government collects [$ in revenue. Therefore, the net welfare effect is a of3. Welfare effects of a tariff in a small country Suppose Honduras is open to free trade in the world market for wheat. Since Honduras is small relative to the international market, the demand for and supply of wheat in Honduras have no impact on the world price. The following graph shows the domestic market for wheat in Honduras. The world price of a ton of wheat is Pw = $400. On the following graph, use the green triangle (triangle symbols) to shade the ares representing consumer surplus (CS) when the economy is at the free-trade equilibrium. Then, use the purple triangle (diamond symbols) to shade the area representing producer surplus (PS). (?) 1200 Domestic Demand Domestic Supply 1100 CS 1000 800 PS PRICE (Dollars per ton) 700 600 500 400 300 200 20 40 60 QUANTITY (Tons of wheat) Because Honduras participates in international trade in the market for wheat, it will import [ tons of wheat. Now suppose the Honduran government decides to impose a tariff of $200 on each imported ton of wheat. Under the tariff, the price Honduran consumers pay for a ton of wheat becomes ($ and Honduras will import tons of wheat. Use the following graph to show the effects of the $200 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 surplus with the tariff and the purple triangle (diamond symbols) to show the producer surplus with the tariff. Lastly, use the orange quadrilateral (square 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