1. Home is a large country. The demand for a good at home is QB : 14 P and the 2. supply for the same good is Q5 i P 4. The Foreign export supply function is QXS'? : 3px _ 3 . I . (a) Calculate Home consumer, producer and total surplus in the absence of trade. (b) Determine Home's import demand function. (0) Determine the price of the good when Home and Foreign engage in freetrade. How much of the good does the home country import? (d) Determine Home's consumer, producer and total surplus under free trade. (e) If the Home government imposes an import tariff in the amount of t : $3. nd the new levels of consumer, producer, 0rovernment and total surplus. Does the import tariff t = $3 increase Home's welfare? Trade Policy: Emport Subsidy Home exports guitars. Home's demand for guitars is Qd = 1400 v P. Home's supply of guitars is Q5 2 3p v 600. (a) Determine the export supply function of guitars for the Home country. 'What is the autarky price of a guitar at Home? (b) If the Foreign import demand function is QMD'k : 1000 13* nd the freetrade price of a guitar, PW and the volume of Exports from Home to Foreign, Qw. \"That is the increase to World Surplus as a result of the move from Autarky to Free trade? (0) Producers at Home lobby the government for support for the Home guitar industry. One policy that the Home government considers is: (i) a specic export subsidy, 85 = $100, paid to producers for each guitar exported. Determine the price of a guitar in Home and Foreign when there is an export subsidy, 35. Determine the new volume of exports from Home to Foreign. Calculate the change to Home's welfare under the export subsidy (change relative to free trade). Consider the specic production subsidy. Compare (with a gure if helpful) the effect on Home welfare due to the production subsidy instead of the export subsidy. (You do not have to calculate this change, just provide a qualitative comparison). (d) The second policy that the Home government considers is: (ii) a specic production subsidy, Sp : $100, paid to producers for each guitar pro duced