Suppose that Canada's economy is closed to international markets for milk and the price of milk is 5$ per gallon and 10 thousand gallons of milk per week are traded. Canada decides to open the economy to trade and the world price for milk is 2 dollars per gallon. As a result, Canadian consumers buy 14,000 gallons per week and only 8,000 gallons are produced domestically. a) (10 points) Show the situation described above with a diagram of Canada's weekly domestic supply and demand for milk. Show in your diagram how does Canada's decision to open to international trade affects consumers and producer's surplus. What are the gains from trade? Suppose that because of pressure by Canadian dairy farmers the government decides to implement a 1$ per gallon tariff to imports of milk. As a result, domestic production goes up to 9,000 gallons per week and consumer demand is 12,000 gallons per week. b) (15 points) Show the effect of the tariff on a new diagram. How much does the Canadian government collect as tariff revenue? How does the tariff affect producers and consumers of milk in Canada? Are there any inefficiencies introduced by the tariff? Explain