Tariff question

3. A tiresome tarriff! On Sep 11, 2009, the New York Times reported that "In a break with the trade policies of his predecessor, President Obama announced on Friday night that he would impose a... tariff on automobile and light- truck tires imported from China. The decision is a major victory for the United Steelworkers, the union that represents American tire workers. And Mr. Obama cannot afford to jeopardize his relationship with major unions as he pushes Congress to overhaul the nation's health care system." Let us make some simplifying assumptions to analyze these tariffs. Suppose that demand for radial car tires in the US is given by the equation: P = 150 -0.20, and non-Chinese supply to the US is given by P = 0.08Q, where P is in dollars per tire, and Q is in millions of tires per year. (You can treat "non-Chinese supply" the same as "US supply" for any calculations of producer surplus or deadweight loss. You can also assume that purchasers of radial car tires do not care about where the tire is manufactured and will always simply buy whatever tire is the lowest price.) Assume that before the tariff, the US faced a supply curve from China given by P = 30. Also assume that the tariff imposed is simply $10 per tire. (a) Before the tariff, and with no other restrictions on trade, what would be the price of radial car tires in the US? What quantity would US consumers buy? What quantity would non-Chinese producers supply to the US market? What quantity would be imported from China? (b) Now consider the situation with the $10 tariff in place. With the $10 tariff in place, what will be the price of radial car tires in the US? What quantity would US consumers buy? What quantity would non-Chinese producers supply to the US market? What quantity would be imported from China? What would be US government revenue from the tariff? (c) Suppose that the tariff helped create one thousand additional jobs in the radial car tire industry in the US. How much cost (in deadweight loss) was incurred per job