4.The demand for widgets is given by = 40 2 where is the number of widgets demanded (in millions) and p is their price per unit. The domestic supply of widgets is given by = 2 3 where is the number of widgets supplied (in millions). Widgets can also be freely imported at a price of $9 per widget. In addition, there is an import tariff on widgets of $9 per unit.

(a) What would be the equilibrium price of widgets, the quantity produced domestically and the quantity imported?

(b) Suppose that, under the terms of a new free trade agreement, the government plans to eliminate the import tariff on widgets. What would now be the equilibrium price of widgets, the quantity produced domestically and the quantity imported?

(c) Who gains and who loses from the free trade agreement and by how much? How much better off or worse off is society as a result?