3. The market for watches in the 'domestic economy" is perfectly competitive. Suppose the demand and supply in the domestic. economy are respectively given by: Demand: P =3002QD Supply: P = 50 + 3 Qs where quantity is measured in thousands of watches, and the price is expressed in S's-"watch. (a) At the current world price (Pt)= domestic supply is 20 thousand watches. Draw a well labeled graph that illustrates the domestic demand, the domestic. supply, and level of imports at the current wprld price (PW). Also, calculate the consumer surplus (031) and producer surplus (P81). Clearly show all calculations. (5 points) [b] The domestic govemment is considering establishing a tar'i\" ('3: Match] on the import of watches The government wants to impose a tariff that wil increase domestic production by 5 thousand w.atches Calculate the le\\- el of tariff that 1s consistent with this objective of the government. Clearly show all W illustrate your answer using a well labeled graph. (10 points) ((1) Discuss the impact of the tari' on the domestic economy using appropriate Mons. Clearly show all your W illustrate your answer using a well labeled graph. (10 points) [(1] The watch lobby claims that the tariff benets the domestic watch industry and, therefore, benets the domem'c economy. Do you agree with the watch lobby? Clearly explain your answer using appropriate calculations 'om part (c). (5 points) (e) Could you devise an alternative policy that will accomplish the same increase in domestic production of 5 thousand watches? If so. explain the effects of the suggeed alternative policv in comparison to the tari'. Clearly show all W illustrate your answer using a w-ell labeled graph. (5 points)