Draw a figure similar to Figure 8.1 for Nation 1 but with the quantity of commodity Y on the horizontal axis and the dollar price of Y on the vertical axis. Draw SY for Nation 1, identical to SX for Nation 2 in Figure 8.1, but draw DY for Nation 1 crossing the vertical axis at PY = $8 and the horizontal axis at 80Y. Finally, assume that PY = $1 under free trade and that Nation 1 then imposes a 100 percent ad valorem import tariff on commodity Y. With regard to your figure, indicate the following for Nation 1:
(a) The level of consumption, production, and imports of commodity Y at the free trade price of PY = $1.
(b) The level of consumption, production, and imports of commodity Y after Nation 1 imposes the 100 percent ad valorem tariff on commodity Y.
(c) What are the consumption, production, trade, and revenue effects of the tariff?
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