Suppose that Canada produces 1.0 million bicycles a year and imports another 4.0 million; there is no tariff or other import barriers. Bicycles sell for $400 each. Parliament is considering a $40 tariff on bicycles.
What is the maximum net national loss that this could cause Canada?
What is the minimum national loss if Canada is a small country that can not affect the world price?
(Hint: draw a diagram with supply and demand and put numbers given here on it.
Next, imagine the possible positions and slopes of the relevant curves.)