d. Now suppose that the U.S. is a large country in the global sugar market, and its protec¬tion of domestic sugar makers affects the world price of sugar. Assuming that the gov¬ernment uses a 50% tariff (with no quota), interpret the graph below (what does the $280 per ton price represent? What is the new domestic price with the tariff?) and again calcu¬late the welfare effects on domestic producers, consumers, and the govern¬ment, and the net wel¬fare effect (gain or loss) for the U.S. How does the net gain or loss com¬pare with what you found in part a., and why? Again also draw the corresponding graph for the world sugar market and use it to show how the world price is determined with the tariff.
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