2. The domestic market is perfectly competitive and is in equilibrium. Demand is given by = 100 and supply is given by = 4. The world price for this product is $10.

(a) Calculate consumer surplus and producer surplus in the domestic market under free international trade policy. Illustrate with a graph.

(b) The government is considering using a tariff of $10 per unit to eliminate foreign competition. Calculate CS, PS, government revenue and the deadweight loss from this policy. Illustrate with a graph.

(c) Another option is trade prohibition. The government might simply decide to not allow foreign product into the country. Calculate CS, PS, government revenue and the deadweight loss from this policy. Illustrate with a graph.

If the demand is given by = 20 2. There is only one producer in this market.

(d) Suppose the producer has constant marginal cost of $2 per units and a fixed cost of $30. Solve for this firm's profit maximizing output, price, and the resulting profit. Illustrate with a graph.

(e) Calculate the total surplus on this market. Is there a deadweight loss? Illustrate with a graph.