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1 Two-country model: China and ROW. The car is priced in Yuan in both of the 2 countries. Suppose that: In China, the Demand and

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1 Two-country model: China and ROW. The car is priced in Yuan in both of the 2 countries. Suppose that: In China, the Demand and Supply equation of cars: De = 2000 - 0.02*Pc, Sc = 1200 + 0.03*Pc; In ROW, the Demand and Supply equation of cars: Drow = 1800 -0.02* Prow, Skow = 1400 + 0.03*Prow. Please answer the following questions (You are required to draw the X-Y plot, and give the complete process of calculation): (1) When there is no trade, the equilibrium price and quantity in the two countries respectively. (2) When there is free trade, the international equilibrium price of cars, and the production quantity and the consumption quantity of the two countries respectively. Now, if China decides to impose an import tariff of 1500 W on each car imported, please complete (3)-(4) (3) The equilibrium price, production quantity and consumption quantity of cars in the two countries, respectively. (4) Compared with the free trade situation, what are the effects of tariff on the welfare of different interest groups in China? (10.01)

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