Review Questions 6.1 Graph the supply and demand of a good that is produced domestically and imported. Assume that the country is not large enough to affect the world price. Illustrate the effects that a tariff on imports has. Discuss the following: a. Income distribution effects b. Resource allocation effects c. Domestic production and consumption effects d. Government revenue effects e. Price of the good effects 6.2 Suppose that the world price for a good is 60, and the domestic demand and supply curves are given by the following equations: Demand: P = 100 - 4Q Supply: P = 10 + 5Q a. How much is consumed? b. How much is produced at home? c. What are the values of consumer and producer surplus? d. If a tariff of 20 percent is imposed, by how much do consumption and domestic production change? e. What is the change in consumer and producer surplus? f. How much revenue does the government earn from the tariff? g. What is the net national cost of the tariff? 6.3 According to an article, published by the American Action Forum, "United States unilaterally imposed numerous tariffs on steel and aluminum... from China ... creating upward pressures on prices... (The) tariffs have a notable impact on trade levels, decreasing both exports and imports, . . . (and) reduces the consumer's options" (https://www.americanactionforum.org/research/the- total-cost-of-tariffs/). Briefly explain how the country is better off using this approach. 6.4 What are the potential costs of tariff in addition to the deadweight losses?