Tariff: A Numerical example

Demand: p = 22 - x

Supply: p = 2 + y

Free Trade

t = 0, p* = 5

Domestic Production. 5 = 2 + y, y = 3

Domestic Consumption 5 = 22 - x, x = 17

Import = 17 - 3 = 14.

CS = 17 × 17/2

PS = 3 × 3/2

TS = 149

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Restricted Trade

Tariff: t = 5

p = p* + t = 10.

Domestic Production: 10 = 2 + y. y = 8

Consumption: 10 = 22 - x, x = 12

M = x - y = 4.

CS = 12 × 12/2 = 72

PS = 8 × 8/2 = 32

GS = 5 × 4 = 20

TS = 124

Deadweight Loss = 25. (The sum of the two triangles)