Home's supply curve for spinach is given by

SH=5+P

where SH is the quantity supplied by Home producers in millions of tons and P is the price in dollars per ton.

Home's demand curve is given by

DH=100-P

where DH is the quantity demanded in Home.

Foreign's supply and demand curves are given by

SF=2P

DF=100-P, respectively.

(a) Derive the Home import demand curve and the Foreign export supply curve and use them to find the free-trade equilibrium, including the world price of spinach and the quantity traded. Draw a diagram that shows this equilibrium.

(b) Now assume that Home imposes a $5 per ton import tariff. Show on a diagram how this tariff changes the equilibrium. Compute the new world price and domestic price in Home. Does the tariff raise or lower Home's welfare? Find a quota that would have equivalent effects to the $5 tariff.