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Home imposes a speci?c tariff of 0.5 on wheat imports.
a. Determine and graph the effects of the tariff on the following: (1) the price of wheat in each country; (2) the quantity of wheat supplied and demanded in each country; (3) the volume of trade.
b. Determine the effect of the tariff on the welfare of each of the following groups:
(1) Home import-competing producers; (2) Home consumers; (3) the Home government.
c. Show graphically and calculate the terms of trade gain, the ef?ciency loss, and the total effect on welfare of the tariff.
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