3)

Question 3 [10 marks} Consider the market for a good, where domestic demand and supply are given by the following equations. 132130030\" 1P:10+2(;if'OM Suppose that this country enters into a trade agreement with another country, whereby consumers in the foreign country are able to consume this domestically produced good. The demand for the good, by foreign consumers is given by the following equation: P2100 2QR With the aid of a labelled diagram, analyse the economic effects of this trade agreement on the domestic market for the good. Initial Equilibrium Price [1 mark) Initial Equilbrium Quantity (1 mark) New Equilibrium Price [2 marks] New Equilibrium Quantity [2 marks] New Domestic Production (1 mark) New Domestic Consumption (2 marks) Foreign Consumption [1 mark)