Consider a mythical country called Forestland, which exports a large amount of lumber to a nearby country called Houseland. The lumber industry in Houseland has convinced its federal government that it is being harmed by the low prices being charged by the lumber producers in Forestland. You are an advisor to the government in Forestland. Explain who gains and who loses from each of the following policies.
a. Houseland imposes a tariff on lumber imports from Forestland.
b. Forestland imposes a tax on each unit of lumber exported to Houseland.
c. Forestland agrees to restrict its exports of lumber to Houseland.
d. Which policy is likely to garner the most political support in Houseland? In Forestland?