Suppose that the country of Ozone protects its air-filter industry with a quota that raises domestic prices to $200 per unit. Let the world price of air-filters be $100 and let the autarkic price in Ozone be $250.

a. Assuming that Ozone is a small country, show graphically the impact of the removal of this quota on imports, efficiency loss, consumers, producers and government revenue under perfect competition.

b. After removal of quota, Ozone decides to impose a tariff of $150 per air-filter.Assuming that Ozone is a small country, show graphically the impact of the tariff on imports, efficiency loss, consumers, producers and government revenue. How might this impact be different if Ozone is a large country and the world price falls to $50 ?

c. Please provide two arguments in favor of and two arguments against protecting the air-filter industry in the country of Ozone.