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1. Optimal tariff rate
a. If the foreign export supply is perfectly elastic, what is the optimal tariff Home should apply to increase welfare? Explain.
b. If the foreign export supply is less than perfectly elastic, what is the formula for the optimal tariff Home should apply to increase welfare?
c. What happens to Home's welfare if it applies a tariff higher than the optimal tariff?
d. What happens to Home's welfare if it applies a tariff lower than the optimal tariff?
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