ABC is a small open economy in the world market for watches. The market for watches in ABC is given as follows:

(Domestic) Supply: QS= 500 + 4P

(Domestic) Demand: QD= 625 - P

a) Find the autarky equilibrium price and quantity.

b) Suppose ABC opens to international trade and finds that the free-trade price of watch is $10 per unit. What is quantity traded (i.e., the quantity of exports or quantity of imports)? Find the change in consumer surplus, change in producer surplus, and change in total surplus.

Suppose the government of ABC provides a specific import tariff of $6 per watch.

c) What will be the new level of imports? Also,compare to the free-trade equilibrium, calculate the change in consumer surplus, change in producer surplus, and change in total surplus.

d) Due to political pressure, the government of ABC wants to lower the number of watched purchased abroad in part (c) by 10 units. Find the new level of specific import tariff that would achieve the goal. Also,compare to the free-trade equilibrium, calculate the change in consumer surplus, change in producer surplus, and change in total surplus.