Problem
You will need to draw the graph that you will use to complete this assignment from the following information:
(a) Begin by labeling your vertical axis by 2's from 0 to 20. Then label your horizontal axis by 10's from 0 to 100.
(b) Next draw domestic demand with vertical intercept (0.20) and horizontal intercept (100.0). Also draw domestic supply beginning at the origin and with positive slope equal to 1/5. In other words, the equations are P = 20 - (1/5)Q for demand and P = 1/5Q for supply.
(c) Find the initial equilibrium quantity and price in the market without international trade. Label this point on your drawing.
(d) Suppose the world price is P = 6. Add this to your drawing and determine how many units of the good are imported or exported by the country.
(e) Suppose a tariff is imposed on the market at P=8 Add this to your drawing and determine the change in imports or exports.
(f) Label the area on your graph corresponding to revenue from the tariff and deadweight loss created by the tariff.
(g) Relative to the situation with free trade, does the imposition of the tariff disproportionately affect domestic producers or domestic consumers--or are both affected equally?
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.