Question: PLEASE ANSWER ONLY PART D PLEASE ANSWER ONLY PART D PLEASE ANSWER ONLY PART D PLEASE ANSWER ONLY PART D PLEASE ANSWER ONLY PART D

PLEASE ANSWER ONLY PART D PLEASE ANSWER ONLY PART D PLEASE ANSWER ONLY PART D PLEASE ANSWER ONLY PART D PLEASE ANSWER ONLY PART D

Home's demand and supply curves for coffee are D = 110-20P; S = 10+20P Foreign's demand and supply curves for coffee are D* = 90 - 20P; S* = 30 + 20P

b) (2 points) Now allow Foreign and Home to trade with each other. Find and graph the equilibrium under free trade. What is the world price of coffee? What is the volume of trade? Now, suppose that Home imposes a specific tariff of 1 on coffee imports.

c) (4 points) Determine (numerically) and graph the effects of the tariff on the following: 1) the world price of coffee; 2) the price of coffee in Home; 3) the price of coffee in Foreign; 4) the volume of trade in coffee

d) (5 points) Calculate and show graphically the terms of trade gain, the efficiency loss, and the total effect on welfare in Home of the tariff.

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