Consider the market for oranges in Israel. Assume the supply and demand lines take the following form: S = 20 + 20P, D = 200 - 10P, where P is the price for oranges. Assume that the world price is equal to $2. Assume that a 50% tariff is imposed on imported oranges. Calculate the welfare loss. In order to do that, it is useful to make a drawing similar to Figure 6.6.

Figure 6.6.

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P 120 100 H G 1 1 1 1 A m! E Tariff revenues с 1 1 I Economic losses Qº Qs¹ D FI Qd' B Qd D S