Suppose the U.S. domestic supply and demand of soybean can be described by the following equations:

Demand: QD= 400 10P

Supply: QS= 50 + 5P

Where P is the price per bushel of soybean in dollars per bushel and Q is the quantity in million of bushels. The world price of soybean is $10 per bushel.

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1. Determine the free-market equilibrium price and quantity.
2. If the United States imposes a tariff of $10 per bushel, what will be the U.S. price and level of imports? How much revenue will the government earn from the tariff? How large is the deadweight loss? Numerical calculation required.
3. If the United States has no tariff but imposes an import quota of 80 million bushels, what will be the U.S. domestic price? What is the cost of this quota for U.S. consumers ? What is the gain for U.S. producers? Numerical calculation required.
4. If tariffs, quotas, and subsidies each cause net welfare losses, why are they so common, especially in agriculture, among industrialized countries such as the US and the members of the European Union?