Problem
The domestic demand for bicycles is given by P = 36-0.3Q. The foreign supply is given by P = 18 and domestic supply by P = 16+0.4Q.
(a) Illustrate the market equilibrium on a diagram, and compute the amounts supplied by domestic and foreign suppliers.
(b) If the government now imposes a tariff of $6 per unit on the foreign good, illustrate the impact geometrically, and compute the new quantities supplied by domestic and foreign producers.
(c) In the diagram, illustrate the area representing tariff revenue and compute its value.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.