A lot of Norwegian firms have come up with a cure for pandemics. Due to disbelief in foreign medicines, it is forbidden to import these. Assume that the domestic supply is given by P = Q_T. The domestic demand is given by P = 1500 - 0.5Q_E. P is price and Q is the quantity.

a. Find the market equilibrium (P and Q), consumer surplus, and producer surplus if the domestic market is a free competition market

b. New research results have removed the disbelief in foreign medicines. Therefore import is now allowed. The price on the world market is 500. The Norwegian producers have now improved efficiency and reduced production costs. Therefore the domestic supply is now given by P = 0.5Q_T. Calculate the new values on the variables you calculated in a, and also the import.

c. The workers in the Norwegian firms are dissatisfied with the situation and demand that customs duty is introduced so the import goes away. How big must the customs duty be per product. Calculate the total socio-economic surplus and the distribution of it. Draw a figure that shows the solutions in one of the three sub-tasks. Calculate the price elasticity for the demand in one of the three.

d. Take as a starting point the situation in b. and assume that the Norwegian producers' fusion together so they become a monopolist in the domestic market. Calculate the socio-economic surplus and the distribution of it.