3. Assume the Supply and Demand Models of Widgets for country A are as following:

(Supply) Q= 10P-10

(Demand) Q= -30P+150

a. According to the Model above and in the absence of trade how many million ton of Widgets does this country produce and consume?

b. In the absence of trade what is the country's consumer plus producer surplus?

c. With free trade and no tariffs, price of the world is $2. What is the quantity of Widgets imported?

d. With a specific tariff of $1 per unit, what is the quantity of Widget imports?

e. When moving from the period of free trade to the period of imposing specific tariff, this country experience loss of Consumer Surplus, gain of Producer Surplus, increase of Government Revenue, Dead Weight Loss (DWL) in this case. Please measure each of the quantity.

5. Following figure depicts the supply and demand schedules of calculators for Greece, a "small" country that is unable to affect the world price.

Greece's supply and demand schedules of calculators are as followings

Qd=750-10P

Qs=40P-450

Assume that Greece imports calculators from either Germany or France. Suppose Germany is the world's low-cost producer who can supply calculators to Greece at $15per unit, while France can supply calculators at $20 per unit. Answer the next three questions on the basis of this information.

a. Graph the demand and supply curve of Greece. Figure out the Quantity and Price without trade

a. With free trade, Greek will import from which country? Calculate the import quantity and corresponding Consumer Surplus (CS) and Producer Surplus (PS).

b. If Greek applies specific tariff of $7 then Greek will import from which country? Calculate the import quantity and corresponding CS and PS.

c. In the case of b, suppose Greece forms a customs union with France only, then Greek will import from which country? Calculate the import quantity and corresponding CS and PS. Also estimate the trade creation and trade diversion effect in this case.