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Part $1$

Consider the Canadian market for residential aluminum$$ siding, a relatively standardized product sold in competitive markets and shown in the accompanying diagram. Suppose the world price is $$$$88$ per square foot$$ and, at this$$ price, Canada imports $600$ comma $000600,000$ standard bundles of siding per month. In response to lobbying by Canadian$$ producers, the federal government decides to protect the industrylong dash$$either with a tariff or with an import quota.$($Suppose that each standard bundle contains $100100$ square feet of$$ siding.$)$

Part $2$

a$.$ If the Canadian government imposes a tariff of $5050$ percent on imported$$ siding, then Canadian production will

$$

increase to

remain unchanged at

decrease to

enter your response here bundles per$$ month, Canadian consumption will

$$

increase to

remain unchanged at

decrease to

enter your response here bundles per$$ month, and the price within Canada will

$$

increase to

remain unchanged at

decrease to

$$$enter your response here per square foot.

$($Round quantities to the nearest whole number. Round the price to the nearest cent as$$ needed.$)$

Part $3$

b$.$ The tariff revenue in the situation in part$($a$)$ will be $$$enter your response here. $($Round to the nearest whole number as$$ needed.$)$

Part $4$

c$.$ Now suppose$$ that, instead of imposing a$$ tariff, the Canadian government restricts the import of aluminum siding to $300$ comma $000300,000$ bundles per month. Compared to the situation without$$ tariffs, Canadian production will

$$

decrease to

remain unchanged at

increase to

enter your response here bundles per$$ month, Canadian consumption will

$$

remain unchanged at

increase to

decrease to

enter your response here bundles per$$ month, and the price within Canada will

$$

decrease to

remain unchanged at

increase to

$$$enter your response here per square foot.

$($Round quantities to the nearest whole number as needed. Round the price to the nearest cent as$$ needed.$)$

Part $5$

d$.$ The tariff revenue in the situation in part$($c$)$ will be $$$enter your response here. $($Round to the nearest whole number as$$ needed.$)$

Part $6$

e$.$ Compared to using tariffs to protect a domestic$$ industry, using import quotas to protect a domestic industry results in

$$

less

the same

greater

consumer$$ surplus,

$$

greater

less

the same

producer$$ surplus, and

$$

greater

less

the same

government tax revenue. In terms of total economic$$ surplus,

$$

tariffs are

neither option is

import quotas are

better for Canada.